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The Business Strategy Game

COMPETING IN A GLOBAL MARKETPLACE 2014 Edition

Instructors Guide

The Business Strategy Game is marketed exclusively by McGraw-Hill/Irwin, 1333 Burr Ridge Parkway, Burr Ridge, IL 60527

Copyright 2014 by GLO-BUS Software, Inc. All rights reserved.


No part of this document may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of GLO-BUS Software, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

The Business Strategy Game

Instructors Guide

Instructors Guide
for

This guide provides you with information about The Business Strategy Game and suggestions for using it successfully in your course. Here is a quick reference guide to the contents: A Birdseye View of The Business Strategy Game ............................................................................. 3 Special Business Strategy Game Features and Extras ..................................................................... 8 The Teaching/Learning Benefits of Using The Business Strategy Game in Your Course .......... 11 Getting Ready to Launch The Business Strategy Game for Your Course .................................... 12 Scheduling Decision Rounds ........................................................................................................ 12 How Many Co-Managers Should each Company Have? ............................................................ 13 Should You Require Participants to Take Quiz 1 and Quiz 2?................................................... 14 Should You Assign a 3-Year Strategic Plan?............................................................................... 15 Should You Require a Company Presentation? .......................................................................... 16 Should You Assign an End-Game Peer Evaluation? .................................................................. 17 The Course Setup Procedure.............................................................................................................. 18 How Do Class Members Register and Gain Access to the BSG Website? ................................... 19 How Much Should the BSG Exercise Count in the Total Course Grade? ..................................... 20 How Company Performances Are Scored......................................................................................... 21 How Each Companys Performance on the 3-Year Strategic Plan Is Scored................................ 28 The Administration Menu .................................................................................................................... 30 Tips for Successfully Using The Business Strategy Game ............................................................ 35

How Much Time Will You Have to Spend? One of the biggest factors probably weighing on your mind
if you are contemplating being a first-time user is how much time will it take me to learn about The Business Strategy Game and then conduct the BSG exercise for my course? Here are some honest estimates of what you can expect: It will take anywhere from 30 minutes to an hour for you to print and skim through this Instructors Guide (spend most of your time on the first 20 pages) and the Players Guide (if you want to explore what running a BSG company is all about from a student perspectivebut this can be deferred until later if you wish). It will, of course, take a couple of hours to really digest the contents of both Guides. However, theres a 4-page Quick Guide to Getting Started (see the link in the Instructor Support section of your Instructor Center page) that speeds the gear-up process and allows you to peruse a hard copy of the Instructors Guide at your leisure. To launch BSG for your course, you must complete a 4-step Course Setup procedure that entails specifying the number of companies you want to create to compete head-to-head (which is a function of expected class size and how many people you want to co-manage each company), selecting dates/times for each decision round to be completed, indicating which optional assignments you want company comanagers to complete (the quizzes, strategic plans, peer evaluations, and company presentation exercise), and distributing company registration codes and/or a registration procedures to hand out to class members. Recommendations and thorough explanations are provided in the links accompanying Course Setup right on your Instructor Center screen. This will take 30 minutes or so the first time you do it and about 15 minutes each succeeding term.

The Business Strategy Game

Instructors Guide

It will take you 15-20 minutes to familiarize yourself with the Class Presentation PowerPoint slides that can be used to introduce class members to the features and mechanics of The Business Strategy Game. You will get very few questions from class members about how things work. Site navigation is simple and quickly learned. The Players Guide is easily digested by students. There are brief Video Tutorials for every decision screen and every page of the reports provided after each decision round. In addition, there are comprehensive Help sections that explain cause-effect relationships, provide tips and suggestions, explain how the numbers in the company and industry reports are calculated, and otherwise inform company co-managers how things work. If some of your students seem to be full of questions, its because they are not taking the time to watch the Video Tutorials and/or to read and absorb the comprehensive information contained in the Help sections. Once the Course Setup routine is completed, class members are registered, and the decision rounds are underway, everything occurs automatically until the exercise is complete. At this juncture, its your call on how much time to spendwhether to simply be an interested observer or play a more active, hands-on role. Expect to spend no more than 10-20 minutes per decision round if you just want to provide encouragement, review the scoreboard of company performances on your Instructor Center web page, solicit feedback from co-managers about how things are going, and deal with special problemslike moving co-managers to another team if theres conflict among team members or adjusting the dates for decision deadlines for whatever reason. If you want to follow the competition more closely, you can spend 15-20 minutes after each decision round browsing the Footwear Industry Report (which shows the details of each companys performance and provides assorted financial and operating statistics) and the special Administrators Report (which provides a quick, convenient summary of select decisions and outcomes for each company that will keep you abreast of whats happening). To be even more proactive and intimately involved, after each decision round you can have a 5 to 10minute debriefing on what is happening in the industry (using information from the Footwear Industry Report and the Administrators Report). Because there is tight connection between the issues that comanagers face in running their BSG companies and the chapters in most every mainstream strategy text, there is ample opportunity to use BSG happenings and managerial challenges as examples for your lectures. You can issue special news flashes altering certain costs/rate changes, and you can offer to coach the co-managers of troubled companies on how to achieve better company performance. When all the decision rounds are completed, you will have to spend perhaps 30 minutes assigning grades (maybe longer if your class has 40+ students and you elect to peruse each class members Activity Log). Your online grade book automatically records and reports performance scores for all companies for all decision rounds and also contains each co-managers scores for all assignments (quizzes, strategic plans, and peer evaluations). Once you enter weights for each of the assignments, final scores for each class member are automatically calculated. You will have to decide whether to scale the scores or not. If you want to examine data pertaining to each co-managers use of the BSG website as part of the grade assignment process, theres an activity log for each company co-manager that reports the frequency and length of log-ons, how many times decision entries were saved to the server each decision round, and how many times each set of reports was viewed each decision round.

A Birds-Eye View of The Business Strategy Game


In The Business Strategy Game, 1 to 5 class members are assigned to operate an athletic footwear company that produces and markets both branded and private-label footwear and competes head-to-head against footwear companies run by other members of the class. As many as 12 companies can compete in a single industry grouping (class sizes above 50 are typically divided into two or more industry groups). The companies compete in a global market arena, selling in four geographic regionsEurope-Africa, North America, Asia-Pacific, and Latin America. Athletic footwear makes an excellent setting for a strategy simulation for four important reasons: 1. A simulation always has more power to engage students and stimulate learning when it entails a product (like athletic footwear) that they are intimately familiar with and when it is easy for them to grasp the workings of the industry. 2. Modeling The Business Strategy Game to mirror the real-world global athletic footwear industry is particularly fitting for a strategy simulation because the product is used worldwide, there is competition

The Business Strategy Game

Instructors Guide

among companies from several continents, production plants are geographically scattered, and the realworld marketplace is populated with companies employing a variety of competitive approaches and business strategies. 3. A simulation with a globally competitive market setting (as opposed to just a domestic market setting) is especially desirable because globalization is an ever-widening business reality and global strategy issues are a standard part of strategy courses. 4. Accreditation standards for business school programs routinely require that the core curriculum include international business topics and the managerial aspects of operating in a global marketplace.

Company Operations.

Each company markets its brand of athletic footwear to footwear retailers worldwide and to individuals buying online at the companys web site. Companies start out with two plants, one in North America and one in Asia. Both plants can be operated at overtime to boost annual capacity by 20%. Companies can establish production facilities in Latin America and Europe-Africa as the decision rounds unfold, either by constructing new plants or buying previously-constructed plants that have been sold by competing companies. If a company has more production capacity than is needed to meet the demand for its branded footwear, it can bid for contracts to produce footwear sold under the private-label brands of large chain retailers. Private-label footwear must be produced to the specifications of chain retailers.

Management decides how much to spend on new features, more footwear models, and stylish new designs to keep the companys footwear offerings fresh and in step with the latest fashion. Company co-managers control production costs by raising/lowering footwear quality, adjusting work force compensation, deciding where to locate plants (worker pay scales vary from region to region), and how much to spend on best practices and Six Sigma programs to reduce production defects and boost worker productivity. All newly-produced footwear is shipped in bulk containers to one of four regional distribution centers (North America, Latin America, Asia-Pacific, and Europe-Africa). All incoming orders from internet customers and retailers in a geographic region are filled from footwear inventories in that same regional distribution center. Since internet and retailer orders cannot be filled from inventories in a distribution center in another region (because of prohibitively high shipping and distribution costs), company co-managers have to be careful to match shipments from plants to the expected internet and retailer demand in each geographic region. Costs at the four regional distribution centers are a function of inventory storage costs, packing and shipping fees, import tariffs paid on incoming pairs shipped from foreign plants, and exchange rate impacts. Many countries have import duties on footwear produced at plants outside their geographic region; at the start of the simulation, import tariffs average $4 per pair in Europe-Africa, $6 per pair in Latin America, and $8 in the Asia-Pacific region. However, the Free Trade Treaty of the Americas allows tariff-free movement of footwear between all the countries of North America and Latin America. The countries of North America, which strongly support free trade policies worldwide, currently have no import tariffs on footwear. Instructors have the option to alter tariffs as the game progresses.

The Decisions That Company Co-Managers Have to Make. Each decision round, company comanagers are faced with 53 types of decisions, spread across the functional spectrum as follows:

Corporate social responsibility and citizenship (up to 6 decision entries) Production operations (up to 10 decision entries for each plant, with a maximum of 4 plants) Plant capacity additions/sales/upgrades (up to 6 decision entries per plant) Worker compensation and training (3 decision entries per plant) Shipping (up to 8 decision entries each plant) Pricing and marketing (up to 10 decision entries in each of 4 geographic regions) Bids to sign celebrities (2 decision entries per bid) Financing of company operations (up to 8 decision entries)

Experience confirms that having this many decisions is right on the moneyenough to keep company co-managers engaged and challenged but not too many to confuse and overwhelm.

On-Screen Support Calculations. Each time co-managers make a decision entry, an assortment of
on-screen calculations instantly shows the projected effects on unit sales, revenues, market shares, total profit, earnings per share, ROE, unit costs, and other operating outcomes. All of these on-screen calculations help co-managers evaluate the relative merits of one decision entry versus another. Company

The Business Strategy Game

Instructors Guide

managers can try out as many different decision combinations as they wish in stitching the separate decisions into a cohesive whole that is projected to produce good company performance. If company co-managers want additional help/assistance in making decision entries, they can watch the 2-4 minute video tutorials for each decision screen and/or consult the comprehensive Help sections that explain cause-effect relationships, provide tips and suggestions, explain how the numbers in the company and industry reports are calculated, and otherwise inform company co-managers how things work.

The Quest for a Winning Strategy. All companies begin the exercise with equal sales volume, global
market share, revenues, profits, costs, product quality and performance, brand recognition, and so on. Global demand for athletic footwear grows at the rate of 7-9% annually for the first five years and 5-7% annually for the second five years. However, market growth rates vary by geographic region, and growth rates are also affected by the aggressiveness with which companies go after additional sales by making their product offerings more appealing. Competition in the market segments for branded footwear is based on 11 factors: How each companys wholesale selling price for its branded footwear compares against the corresponding industry-wide average prices being charged in each geographic region. How each companys footwear styling and quality compares against that of rival brands. How each companys advertising expenditures compare against the industry-wide average advertising expenditures. How each companys mail-in rebate offers compare against the rebates offered by rival companies. How the number of models/styles in each companys branded footwear offerings compare against the industry-wide average number of models. How the numbers of retail outlets stocking a companys brand of footwear compares against the average number of retailers carrying rival footwear brands. How the number and appeal of the celebrities a company has contracted with to endorse its footwear compares against the overall celebrity appeals of endorsers of rival brands. How the length of each companys shipping and delivery times on retailers orders compare against those of rival companies. The comparative amount (relative to rival brands) of merchandising and promotional support that a company offers to its retailers relative to the average amounts offered industry-wide. The aggressiveness with which a company promotes online purchases at its website as compared to the aggressiveness of rival companies. The extent to which the buyers of a companys brand of footwear remain loyal to repurchasing that same brand.

Each company typically seeks to enhance its performance and build competitive advantage via its own custom-tailored competitive strategy based on more attractive pricing, greater advertising, a wider selection of footwear models/styles, and so on. Any and all competitive strategy optionslow-cost leadership, differentiation, best-cost provider, focused low-cost, and focused differentiationare viable choices for pursuing better company performance and competitive advantage in the branded footwear segment. There is no built-in bias favoring any one strategy and no secret set of strategic moves or competitive approaches that guarantee a companys success in the industry. A company can try to gain an edge over rivals in the branded footwear segment with more advertising or a wider selection of models or more appealing styling/quality or bigger rebates or securing more appealing celebrity endorsements, and so on. It can focus sales efforts on one or two geographic regions or strive to build strong market positions in all four geographic regions. It can pursue essentially the same branded strategy worldwide or craft slightly or very different strategies for each of the four geographic regions. It can put more or less emphasis on selling branded shoes to retailers as opposed to selling to individual consumers at the companys web site. Most any well-conceived, well-executed competitive approach in branded footwear is capable of succeeding, provided it is not overpowered by the opposing strategies of competitors or defeated by the presence of too many copycat strategies that dilute its effectiveness. However, vigorous price competition dominates the private-label segment. For obvious reasons, chain retailers prefer to source their requirements for private-label footwear from companies offering the best (lowest prices). Companies desirous of winning a contract to supply private-label footwear to chain retailers

The Business Strategy Game

Instructors Guide

across the world must first agree to produce shoes that meet globally-set buyer specifications for quality and variety of models/styles. Then they must be successful in bidding against rival companies for contracts. Companies offering to supply specified quantities of private-label footwear with lower price bids are awarded contracts over companies that bid higher prices. A low-cost, low-price strategy is thus mandatory in the private-label segment if a company expects to be profitable (but this does not require pursuing the same strategy in the branded segment).

How the Outcomes Are Determined. Instructors establish a deadline (date and time) for company comanagers to complete for each decision round and other related assignments. Instructors have the flexibility to change the deadlines at any time for any reason. Decision rounds can be scheduled once per week, twice per week, daily, or even twice daily, depending on how you want to conduct the exercise. You will be able to peruse sample decision schedules when you are settling on the times and dates for the deadlines. When the instructor-specified deadline for a decision round arrives, the BSG algorithms allocate sales and market shares to the competing companies, region by region. How many branded pairs a company sells in each geographic region is governed by:

how its branded footwear price compares against the prices of rival brands, how its footwear styling and quality compares against those of rival brands, how its advertising effort matches up against the advertising efforts of its rivals, and so on for each competitive factor.

For instance, a companys branded footwear price in a region is determined to be more competitive the further it is below the average price in that region charged by all companies and less competitive the further it is above the regional average. A companys footwear styling/quality is determined to be more competitive the further its styling/quality rating is above the average styling/quality for the region and less competitive the further its rating is below the regional average. The overall competitiveness of a companys product offering in a region is a function of its combined competitive standing across all competitive factors. For example, a company can offset the adverse impact of an above-average price branded footwear by offering footwear with above-average styling/quality, above-average advertising, a wider selection of models/styles, and/or greater utilization of celebrity endorsements. The greater the differences in the overall competitiveness of the product offerings of rival companies, the bigger the differences in their resulting sales volumes and market shares. Conversely, the smaller the overall competitive differences between rival companies, the smaller the differences in sales volumes and market shares. This algorithmic approach is what makes BSG a competition-based strategy simulation and accounts for why the sales and market share outcomes for each decision round are always unique to the particular strategies and decision combinations employed by each company. Once branded sales volumes and market shares are awarded (based on the relative strength or weakness of each companys competitive effort) and the outcomes of the private-label bidding are determined, then each companys performance is calculated and all the various company and industry reports are generated. The results of the decision round are available to class members and the instructor about 15-20 minutes after the deadline passes. The scoring of each companys performance is based on a balanced scorecard that includes brand image, earnings per share (EPS), return on average equity investment (ROE), stock price appreciation, and credit rating. All cause-effect relationships and underlying algorithms in The Business Strategy Game are based on sound business and economic principles and are closely matched to the real-world athletic footwear market. The real-world character of the competitive environment and company operations built into The Business Strategy Game allows company co-managers to think rationally and logically as they go about the tasks of diagnosing the competitive moves of rival companies and deciding how to manage their athletic footwear company. The thesis is that the more BSG mirrors real-world market conditions and real-world managerial decision-making, the more pedagogical value it has. Why? Because tight linkages between the functioning of BSG and the real world provide class members with an authentic learning experience, a bona fide means of building their skills in analyzing markets and the actions of competitors, and a true-to-life way to practice making business-like decisions and applying the knowledge they have gained in business school.

Special Note: Because the unit sales/market share outcomes in BSG are 100% based on the overall competitiveness of each companys product offering versus that of rivals, the pattern of company performances in the BSG simulation is always unique, governed solely by the combination of strategies

The Business Strategy Game

Instructors Guide

and decision entries of the various rival companies across the various decision rounds. How well a company fares depends on not only on the astuteness/power (or lack thereof) of its own strategy and set of decision entries but also on the astuteness/power (or lack thereof) of the strategies and decision entries of rival companies. Sometimes an aggressive low-cost strategy will prove wildly successful (usually because no other rivals pursue the same strategy with equal astuteness); at other times, an aggressive low-cost strategy may be less successful (often because several other companies adopted much the same strategy, thus neutralizing the potential competitive advantage and benefits for any one company). What works well for one or two companies in a 10-company industry may work poorly if employed by 5 or 6 companies. Likewise, an astutely crafted low-cost provider strategy may overpower somewhat flawed high-end product differentiation strategies of rival companies but in another instance lose out to a rival company with a competitively potent high-end product differentiation strategy. The interplay among the strategies and decision sets of rival companies matters and this interplay varies from round to round within an industry as companies continually make adjustments in their strategies/decisions. And this interplay is never quite the same from one industry group to another industry group. This is precisely why there can be no magic bullet strategy or single combination of actions and decisions that is guaranteed to produce an industry-winning performance. This leads to another crucial understanding: No two groups of competing companies (those in different industrieswhether it be during the same academic term or across different academic terms or on different campuses) are ever likely to employ near-identical mixes of strategies and decisions with nearidentical degrees of astuteness and market effectiveness (there are simply far too many variables and differences among class members for this to happen). Sometimes the best performing company wins with some variety of a low-cost provider strategy; sometimes the best company wins with a high-end product differentiation strategy; and sometimes use of a best-cost provider strategy results in an industry-leading performance. The fun for both students and instructors is that you can never be sure how any companys strategy and decision sets will play out in a given class until it happens. Conclusions: It is truly perilous (if not foolish) for team members to ignore or downplay the extent to which the actions and decisions of competitors affect the performance and competitive well-being of their own company. Long-time users of BSG have all heard stories about how the co-managers of some companies are prone to listen to and/or follow the advice they got from students in prior terms about what to do and not do to win or get a good grade. There are also instances where company managers scour the Internet and discover sites created by profit-seeking former players of BSG who will sell their advice and secrets for a price. Very often, the students of poorly-performing companies will complain to their instructors that the industry-leading companies are doing well only because of benefits gained from advice secured elsewhere (advice that they did not know about and that accounts for their weaker performance). But such complaints are flawed. In the first place, company performances in BSG are driven primarily by (1) the competition-based algorithms used to allocate sales volumes and market shares and (2) whether co-managers run their company in a cost-effective manner and are thus able to achieve attractive performance at the competitively-earned sales volumes and market shares. In the second place, the circulation of simplistic do-this-but-not-that rules on the part of people who have previously participated in the BSG exercise is really based on things all business students should know and not on things that are unique to running a BSG company. For instance, advice to retire shares of stock is not an earth-shattering revelationreal world companies do this all the time and the reasons are covered in basic finance courses taken by business students. Advice of this sort has little real value to most students and failure on the part of some students to know business basics is a very lame excuse for weak company performance. In short, we do not believe the generic advice available from Internet sources or prior players of BSG in any compromises the integrity of using BSG in your course.

Time Requirements for Class Members. Data from our servers indicates that each company team spends an average of about 2 hours working on each decision round. The first couple of decision rounds take longer, not only because co-managers have to explore the menus, familiarize themselves with the information on the screens, and absorb the relevance of the calculations shown whenever new decisions are entered but also because it takes time for them to establish a working relationship with one another and debate what sort of long-term direction and strategy to pursue.
The total workload for each team of students/participants ends up between 20 and 30 hours, given an average of 2 hours per decision round, 9 to 12 decision rounds (including practice rounds), and the time needed to complete optional assignments (quizzes, strategic plans, company presentation, and peer evaluations). As discussed earlier, you can offset the hours students spend on the simulation by trimming the number of case assignments, eliminating a written case assignment (which can take students 10-15 hours to prepare), and perhaps allocating one or more regularly-scheduled class periods to having class members meet in a computer lab to work on their decisions or do the 3-Year Strategic Plan assignment.

The Business Strategy Game

Instructors Guide

It will consume part of a class period to introduce class members to The Business Strategy Game and get things under way. Thereafter, the simulation becomes an out-of-class group exercise where co-managers spend most of their time working on a PC (in a lab or at a co-managers place of residence).

Special Business Strategy Game Features and Extras


A host of capabilities and convenient, time-saving features have been designed into the screens and menus to make GLO-BUS both a breeze for students and instructors to use and readily customizable to your requirements and preferences:

There is a 17:17-minute video overview that introduces class members to the simulation, takes
them of a tour of the website menus and accompanying screens, and helps get them off to a successful start. There is also a 16:24-minute orientation video for instructors.

Instructors who are considering use of BSG can attend any of the 15 or so author-conducted

webinar/demos scheduled throughout each yearthe demos run 60 to 75-minutes and allow ample time for Q&A.

In the course of running their company (making decision entries and viewing reports), class

members have one-click access to 2-5 minute video tutorials for each decision entry screen and each page of all reports. In addition, they have one-click access to Help sections containing detailed explanations of (a) the information on each decision entry screen and all relevant cause-effect relationships, (b) the information on each page of the Industry Reports, and (c) the numbers presented in the Company Reports. The Help pages for each decision entry screen also contain tips and suggestions for making wise decision entries. The video tutorials and full-blown Help page discussions allow company co-managers to figure things out for themselves, thereby relieving instructors of having to answer questions about how things work.

It is quick and easy to set up the BSG simulation for your course. The Course Setup Procedure is
done online and takes about 15 or so minutes. There is a 4-page Getting Started Guide for first-time adopters that guides you through the steps to set up the simulation for your course, describes the administrative tasks, explains the scoring, and provides suggestions for using the simulation effectively. If and when you need more details about some aspect of the simulation, this 40-page Instructors Guide provides comprehensive explanations and guidance. Once the straight-forward Course Setup Procedure is completed, no other administrative actions on your part are required beyond that of moving participants to a different team (should the need arise), keeping tabs on the outcomes of the decision rounds and how well the companies are doing (to whatever extent desired), setting the grading weights for various simulation-related assignments, and using the automatically calculated numerical averages to determine the overall grades to assign class members on the simulation exercise.

An online Instructor Center serves as your hub for conducting all administrative activities and

monitoring the results of the company decisions. The Instructor Center is the screen you are sent to when you enter your user name and password to log-in. Every function and feature that you need for using the simulation in your course is on the Instructor Center page or accessible from it. Online grade books provide you with scores indicating each companys and each participants performance on each phase of the simulation. Once you enter percentage weights for each performance measure, scores are automatically calculated (which you can scale or not as you see fit). Both participants and instructors conduct all activities at www.bsg-online.com. All materials are delivered digitally vie the Internet to class members and instructors. o Students gain full access to everything needed during the course of the simulation, including the Players Guide, immediately upon registeringstudents can read the Guide and other accompanying content online or print the materials, as they prefer. o Likewise, instructors gain full access to all materials online through the BSG website immediately upon creating an Instructor Account at the website home-page.

There are no cumbersome software downloads or program installations necessary.

Class members and instructors have anywhere, anytime access to www.bsg-online.com on any
desktop or laptop computer connected to the Internet and equipped with web browser software (such as Chrome, Internet Explorer, Firefox, or Safari) with the Adobe Flash Player plug-in 10.3 (or later). Users without the needed version of Flash already installed will be automatically directed to the Adobe site where the latest version can be downloaded and installed free of charge in a couple of minutes. As long as site users have a live internet connection, they will have 24/7/365 access to the BSG web site.

The Business Strategy Game

Instructors Guide

Co-managers of a company (team members) who are logged-on simultaneously can use the built-

in Collaboration Mode and Audio Mode capabilities, as well as on-screen messaging, to collaborate when working online at the same time from different locations.

o When in Collaboration Mode, each team member works from the same screen at the same time as all other team members who are logged-in and have joined Collaboration Mode. If one team member chooses to view a particular decision screen, that same screen appears on the monitors for all team members engaged in collaboration. o Each team member controls a color-coded mouse pointer (with their first-name appearing in a colorcoded box linked to their mouse pointer) and can make a decision entry or move the mouse to point to particular on-screen items. o When a decision entry is changed made by one team member the change is seen by all, in real time, and all team members will immediately see the shared-screen calculations that result from the new decision entry. o If one team member wishes to view a report page and clicks on the menu link to the desired report, that same report page will immediately appear for the other team members engaged in collaboration. o Use of Audio Mode capability requires that each team member work from a computer with a built-in microphone (if they want to be heard by the rest of the team) and speakers (so that they may hear their teammates) or else have a headset with a microphone. A headset is recommended for best results, but most laptops now are equipped with a built-in microphone and speakers that will support use of the voice-chat capability. o Instructors have built-in capability to join the online meetings of any company directly through the instructor account. Instructors who wish not only to talk but also enter Collaboration (highly recommended because all attendees are then viewing the same screen) have a red-colored mouse pointer linked to a red box labeled Instructor. The ability of instructors and company co-managers to have an online meeting at a mutually agreeable time is often more convenient than scheduling faceto-face meetings during an instructors office hours.

The built-in Collaboration and Audio Mode features make the simulations highly suitable for use
in distance-learning or online courses (and are currently being used in many such courses).

The deadlines for each decision round and other related assignments are set and totally

controlled by the instructor (and can be changed at any time for any reason). Decision rounds can be scheduled once per week, twice per week, daily, or even twice daily, depending on how you want to conduct the exercise. simulation Web site. There are sample outlines for semester-long courses, 10-week or quarter-long courses and 5-week courses; each course outline consists of suggested activities and assignments for each and every class meeting.

Sample course outlines for integrating BSG into your strategy course are provided online at the

The management teams for each company can range from 1 to 5 co-managers, and the number of

companies competing head-to-head in a single simulation group or industry ranges from 4 to 12. If you have a large class and need more than 12 companies, the Course Setup procedure makes it simple to create two or more industries for your class. In a small class, there can be no fewer than 4 company teamstwo-person teams will work just fine. (For classes with fewer than 8 students, please call us at 205-722-9149 or e-mail athompso@cba.ua.edu to discuss how best to proceed.) When the deadline passes, the decision entries of all companies are then processed automatically. Complete results are available to company co-managers and the instructor 15-20 minutes after the scheduled deadline.

The entries that co-managers make each decision round are saved directly to the BSG server.

Participants and instructors are notified via e-mail when the decision outcomes are ready.
Company co-managers learn the details of what happened in a 7-page Footwear Industry Report, a 1page Competitive Intelligence report for each geographic region that includes strategic group maps and bulleted lists of competitive strengths and weaknesses, and a 5-page set of Company Reports (income statement, balance sheet, cash flow statement, and assorted sales, cost, and operating statistics).

A scoreboard of company performance incorporates two performance measures: (1) how well

each company meets investor expectations on earnings per share, return on shareholders equity (ROE), stock price appreciation, credit rating, and image rating and (2) how well each company stacks up against the best-in-industry performer on each of these same 5 measures.

The Business Strategy Game

Instructors Guide

You have the option to assign two open-book multiple choice quizzes each consisting of 20

questions. Quiz 1 covers the contents of the Participants Guide. Quiz 2 checks understanding of key aspects of company operations. The self-scoring quizzes are taken online by each student individually, with scores reported instantaneously to participants and recorded in your online grade book. (1) articulate a strategic vision for their company (in a few sentences), (2) set performance targets for EPS, ROE, stock price appreciation, credit rating, and image rating for each of the next three years, (3) state the competitive strategy the company will pursue, (4) cite data showing that the chosen strategy either is currently on track or requires further managerial actions, and (5) develop a projected income statement for the each of the next three years based upon expected unit sales, revenues, costs, and profits. Each companys strategic plan is automatically graded on a scale of 1 to 100, with points being earned for meeting or beating the performance targets that were established. The scores are recorded in your online grade book automatically. Assigning completion of 3-year strategic plans is entirely optionalyou can have company managers complete no plan, 1 plan, or 2 plans.

There is a built-in 3-year strategic plan feature that entails having each companys management team

At the conclusion of the simulation, you have the option to have each company management
team prepare a slide presentation reviewing their digital camera companys performance and strategy. A Company Presentation link in each co-managers Corporate Lobby provides explicit slide-by slide suggestions of what to cover in the presentation. Company co-managers may easily download and insert bar charts showing their companys revenues, earnings per share, ROE, stock price, credit rating and image rating during the course of the simulation.

There is a comprehensive 12-question peer evaluation form that co-managers can complete to help There is an Activity Log that provides an informative summary of each co-managers use of

you gauge the caliber of effort each co-manager has put into the exercise. Peer evaluations are automatically scored on a scale of 1 to 100, and the scores are recorded in your online grade book. various parts of the websitethe frequency and length of log-ons, how many times decision entries were saved to the server each decision round, and how many times each set of reports was viewed each decision round. The combined information from the two quizzes, peer evaluations, and activity logs provide good evidence about whether a co-manager was a strong or weak contributor. concerning how well your students performed versus students playing the simulation at all schools/campuses worldwide over the past 12 months. The report measures 10 areas of student proficiency, business know-how, and decision-making skill, and provides potent benchmark evidence valid for gauging the extent to which your schools academic curriculum is delivering the desired degree of student learning as concerns accreditation standards. The LAR is useful in two very important respects. One, it provides you with a clear overview of how well your students rank relative to students at other schools worldwide who have gone through this same competition-based simulation exercise over the past 12 months. Two, because the report provides highly credible evidence regarding the caliber of business proficiency and decision-making prowess of your students, it can be used to help assess whether your schools academic curriculum in business is providing students with the desired degree of business understanding and decision-making acumen. Professors, department chairs, and deans at many business schools worldwide are engaged in developing ongoing evidence of whether their academic programs meet the Assurance of Learning Standards now being applied by the Association to Advance Collegiate Schools of Business (AACSB); a prime goal of this Learning Assurance Report is to contribute significantly to this effort.

An end-of-simulation Learning Assurance Report (LAR) provides you with solid empirical data

There is a weekly ranking of the best-performing companies worldwide posted on the homepage all co-managers and instructors whose companies appear in the rankings are automatically notified by email. You can browse through the latest rankings by clicking on the icon in the center of the homepage. The co-managers of the overall best-performing company in your class can be automatically emailed an Industry Champion certificate suitable for framing when the simulation ends. This certificate serves to document an award or achievement they can put on their rsums. Each industry-winning company playing BSG across the world is invited to participate in the Best Strategy Invitational. The BSI is held three times annuallyin May, August, and December. Those teams that accept the invitation are divided into industries of 11-12 companies and compete for a period of 10 decision rounds for Global Industry Championships. All participants who participate in the competition receive frame-able certificates, and the industry winners get a Grand Champion certificate. Receipt of these certificates also merits a line on a students rsum.

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Comprehensive question-answering and problem-solving is provided to all adopters by co-authors Art Thompson and Greg Stappenbeckjust use the tech support link in the Instructor Center to send an e-mail at Instructor Support, call us at 205-722-9149, or send an e-mail to athompso@cba.ua.edu.

The Teaching/Learning Benefits of Using The Business Strategy Game in Your Course
There are three exceptionally important teaching/learning benefits associated with using a competitionbased simulation like The Business Strategy Game in courses taken by seniors and MBA students: 1. Having class members run a company in head-to-head competition against companies managed by other class members provides a truly powerful learning experience that thrusts class members squarely into an active, hands-on managerial role. The co-managers of each company are totally responsible for assessing market conditions, determining how to respond to the actions of competitors, forging a long-term direction and strategy for their company, forecasting upcoming sales volumes, and making decisions relating to workforce compensation and plant operations, capacity expansion, distribution center operations and inventory management, pricing and marketing, finance, and corporate social responsibility/citizenship. Because company co-managers are held fully accountable for their decisions and their companys performance, they are strongly motivated to dig deeply into company operations, probe for ways to be more cost-efficient and competitive, and ferret out strategic moves and decisions calculated to boost company performance. It doesnt take long for company co-managers to become emotionally invested in figuring out what strategic moves to make to out-compete rivals. Such diligent and purposeful actions on the part of company co-managers translate into an engaging learning experience with strong retention of the lessons learned and higher achievement of course learning objectives. To provide you with quantitative evidence of the boost in learning power and achievement of course objectives that occurs with using The Business Strategy Game, there is a built-in Learning Assurance Report showing how well each class member performs on 9 skills/learning measures versus tens of thousands of students at some 600+ campuses worldwide that used The Business Strategy Game in the past 12 months. 2. The competitive nature of a strategy simulation arouses positive energy and steps up the whole tempo of the course by a notch or two. The healthy rivalry that emerges among the management teams of competing companies stirs competitive juices and spurs class members to fully exercise their strategic wits, analytical skills, and decision-making prowessmuch more so than occurs with many other types of assignments. Nothing energizes a class quicker or better than concerted efforts on the part of class members to gain a high industry ranking and avoid the perilous consequences of getting outcompeted by class members running rival companies. It is hard to duplicate the excitement and hallway chatter that occurs when the results of the latest decision round become available and co-managers renew their quest for strategic moves and actions that will strengthen company performance. Participating in a competition-based strategy simulation is an unusually stimulating and enjoyable way for class members to learn. As soon as your students start to say Wow! Not only is this fun but I am learning a lot, which they will, you have moved the value of taking your course to a much higher plateau in the business school curriculum. This translates into a livelier, richer learning experience from a student perspective and better instructor-course evaluations. 3. The automated nature of The Business Strategy Game reduces the time instructors spend on course preparation, course administration, and grading. Not only are the administrative requirements quite modest, but since the simulation also involves a 20 to 30-hour workload for student-teams (roughly 2 hours per decision round times 10-12 rounds, plus optional BSG-related assignments), adopters often compensate by trimming other course assignments (often those that entail considerable preparation and/or grading on the instructors part). Grading for The Business Strategy Game is effortless and takes only minutes. Once you enter percentage grading weights for each BSG activity in your online grade book, an overall numerical grade is automatically calculated for each class member. Course preparation time is further cut because you can use several class days to have class members meet in the computer lab to work on upcoming decision rounds or a 3-year strategic plan (in lieu of lecturing on a chapter or covering an additional assigned case). Lab sessions provide a splendid opportunity for you to visit with teams, observe the interplay among co-managers, and view the caliber of the learning experience that is going on.

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The speed and ease with which you can conduct a fully-automated strategy simulation for your course frees time for other activities. Plus, every task can be performed from an office or home PC that has an Internet connection and an Internet browser. Swiftly mounting instructor recognition of the benefits of incorporating a top-notch strategy simulation in their course explains why thousands of instructors worldwide use a strategy simulation exercise and why the numbers are growing briskly every year. (Since market inception, The Business Strategy Game has been used by 2,000+ instructors at 1000+ campuses in 64 countries and played by 750,000+ students).

For What Courses Is The Business Strategy Game Suitable?


The Business Strategy Game is suitable for strategy-related courses for both upper-level undergraduates and MBA students. Our statistics indicate that 74% of the student registrations are in undergraduate courses and 26% are in MBA courses. Our conversations with adopters clearly indicate that that you can have a successful experience with The Business Strategy Game in either senior-level or MBA courses. And the totally online delivery of the simulation makes it ideal for distance learning and online courses. The Business Strategy Game is often used in international business, international marketing, marketing management, entrepreneurship, and small business courses. BSG is well-suited for such courses if the instructor is looking for a simulation with both a strong strategy and international componentthe market setting for BSG is global (import tariffs and exchange rates are featured components of the simulation), and BSG works well for marketing management courses because of its extensive marketing strategy content.

Getting Ready to Launch The Business Strategy Game for Your Course
To set up BSG for your course and get ready for class, you have to consider what deadline dates/times you want to set for each decision round and decide which of the optional assignments you want to employ (the quizzes, strategic plans, peer evaluations, and/or company presentation exercise). Scheduling Decision Rounds. We suggest that you consider one of the three following generic decision round schedules:

One decision round weekly throughout the term (with a total of 1 or 2 practice rounds and 6-10 regular

rounds). This decision schedule spreads the work load of running a BSG company evenly across the entire term. An estimated 65% of adopters use this schedule.

Two decision rounds weekly the last 4-6 weeks of the term (with a total of 1 or 2 practice decision rounds

and 8 regular decision rounds). The advantage of starting the simulation somewhere near the middle of the course is that it removes any concerns you may have about the merits of first exposing class members to some important chapter material (key concepts, analytical tools and competitive strategy options) and perhaps assigning several cases as a prelude to tackling the issues they will face in running their companies. An estimated 30% of adopters use this approach.

Daily decision rounds the last two weeks of the term (this is the least used scheduling approach but is
ideal for concluding the course and using the simulation as a final exam). A variation of this schedule (for executive courses) is to have decision rounds twice daily for a week. However, you should always have at least a 3-hour interval between decision rounds to give co-managers time to review the industry and company reports and develop their strategy and decisions for the next round.

Sample decision schedules will be at your fingertips as you do the Course Setup routine. and there are 15 sample course schedules (5 for semester-long courses, 5 for 10-week courses, and 5 for 5-week courses) accessible directly from the Instructor Resources menu on the left side of your Instructor Center screen that you can use as guides and suggestions for integrating use of the simulation into the rest of the course. If you are a new simulation user and have no prior experience to draw on, then we suggest that you: 1. Schedule two practice rounds. Practice decision rounds give co-managers time to get comfortable with the software and to conduct risk-free experiments in trying out certain strategies and decision options. Two practice rounds will amply prepare your class for the real thing. However, co-managers can certainly get by with only 1 practice round in time-constrained situations. After the results of the last practice round are available to company co-managers (the results are always accessible 15-20 minutes after the scheduled deadline), you will need to schedule a time for the data to be reset back to the default values for the end of Year 10. Give company co-managers

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enough time to examine and print out the results of the last practice round (say at least 4-6 hours, if not more) when you specify a time for the Data Reset to occur. 2. Include a minimum of 6 regular (scored) decision rounds in your decision schedule. Six or more regular decision rounds gives co-managers time to put a strategy in place, tweak it (or make wholesale changes), and for at least the first 3-4 rounds operate the company for the long-run. However, 8 to 10 decision rounds is significantly better in terms of providing company co-managers with a longterm strategy-making and operating experiencein the last 5 years of the simulation (Years 16-20), slowing market growth for athletic footwear typically generates more intense competitive rivalry and puts every companys strategy to a stronger market test. Bear in mind that you have complete freedom to set up any decision schedule that you wishand further to change the decision schedule at any time for any reason. You have the capability to quickly change the deadlines for upcoming decision rounds and other assignments. You can (1) inform comanagers via the internal messaging system that the schedule has changed or (2) check the box that sends them notification of a schedule change each time you alter any deadline dates or times or (3) announce the change in class or (4) do all of these. The only constraint in changing the decision schedule is that you cannot revise the deadline for a decision round once that particular deadline has passed. However, you have the option of rolling back the schedule, allowing one or more teams to revise their decision entries, and then reprocessing the years results. The roll back option in the Administration Menu gives you complete total control of the decision times.

How Many Co-Managers Should Each Company Have? You can assign from 1-5 persons to each
company management team. Three or 4-person management teams are probably optimal in an undergraduate class while 2 or 3-person teams are optimal in an MBA class. The numbers of comanagers on each team do not have to be equalsome companies can have 3 co-managers and some 4 co-managers. Teams of unequal size are often necessary due to class size. For students who add the class late, it is a simple matter to assign them to an existing team. You may also easily move class members from one team to another (for whatever reason). As a general rule, smaller teams of 2-3 persons are good for several important reasons: Teams of 2-3 can generally reach consensus decisions quicker than teams of 4-5 because there are fewer people to express their opinions and debate back and forth. And there is likely to be less disgruntlement on the part of a co-manager whose ideas and suggested decision entries fail to gain majority support. On 4-5 person teams, when each team member conscientiously tries to be involved and influential, the process of reaching consensus decisions can be arduous and time-consuming. Expect it to take 30-45 minutes longer for 4 and 5-person teams to hash things out and wrangle backand-forth to reach a decision (and for there to be more discontent among those co-managers whose preferred strategy and decisions were rejected by the group). With teams of 2-3 co-managers, each person tends to be more fully engaged in strategizing and decision-making. Each co-managers views weigh more heavily in a 3-person group than a 5-person grouptheres more time and opportunity for each co-manager to express his/her ideas and put their imprint on the companys strategy and decisions. In a group or 4 to 5 co-managers, it is easy for a comanager to be reticent and simply go along with the group. Indeed, the larger the team size, the greater the propensity for one or two co-managers to slack off and let their more industrious and conscientious colleagues carry the workload. The bigger the team size, the harder it becomes for co-managers to arrange mutually convenient meeting times. With 5-person teams, the odds are good that one or more co-managers will be absent from most team meetings, which impedes the ability of co-managers to function as a cohesive and unified team. Admittedly, there will be occasions when all co-managers on a 5-person team are fully engaged; but this tends to be the exception rather than the rule.

Hence, there is a good case for avoiding 5-person teams except where class size dictates otherwise. The best that can be said about a 5-person team is that in theory it spreads the workload and that 5 heads are sometimes better than 2 or 3. In truth, there is no workload to spread when, in fact, all co-managers should be at all team meetings to make their contribution to crafting a strategy and deciding what to do. In 2007, the average team size worldwide was about 3.1 persons. However, the decisions as to the number of teams in an industry (within the 4 to 12 limits) and the numbers of co-managers assigned to each team (within the 1 to 5 limits) are totally yours and you should organize your class into teams however you think best for your situation.

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If your class size is above 40 to 45 and thus too big to have 12 companies some with 3 co-managers and some with 4 co-managers, you may want to consider dividing the class into 2 industries so as to keep from having very many 4-5 person teams. With automated processing, it is only a small incremental administrative burden to set up your class with 2 or more industries as compared to having the whole class in a single industry. When the simulation gets underway, should some teams end up with only two co-managers because one or more of their co-managers drop the course, then we suggest giving the two-person team the option to continue on their ownparticularly if the simulation is well underway or if the co-managers are comfortable with continuing on their own. Teams of 2 persons can be just as successful as teams of 3 or more personsespecially if they are good students and work well together. However, you have menu options allowing you to (1) move co-managers to another company not already having the limit of 5 co-managers, (2) delete an existing company or (3) add a new company.

Should You Require Quiz 1 and Quiz 2? We strongly urge requiring students to take the quizzes and
counting their quiz scores as part of the final simulation grade. The quizzes were developed to provide you with feedback on each class members grasp of the simulation. Both quizzes are open-book and are aimed at pushing class members to learn what is going on rather than testing them. The questions for both Quiz 1 and Quiz 2 are chosen randomly from a larger bank containing 5 versions of the same 20 questions, so that each participant has a mostly different quiz but is still quizzed on the same 20 topics. In the links to the quizzes on the Corporate Lobby screen, all participants are provided a description of what the quiz covers, what printouts to have on hand when taking the quiz, and three sample questions, so that they know what to expect when they take a quiz. All questions for Quiz 1 are drawn directly from the Players Guide. If students have read the Guide, highlighted the parts they consider important, and thumb through the Guide to look up the answers they dont know, they can easily score 80 or higher on Quiz 1. Grades of 90 and higher on Quiz 1 are common. Class members who score 75 or less on Quiz 1 have not read the Guide carefully and are ill-prepared to run their company in an informed manner. We strongly recommend that the deadline for completion of Quiz 1 be set to coincide with the deadline for the first practice decision round (or the Year 11 decision round if you are not using practice rounds). Such an early deadline spurs class members to immediately digest the Players Guide and get a much-needed grasp of the industry situation, company operations, how sales and market share are determined, what performance targets they are expected to achieve, and how company performance is scored. This helps them off to a good start, both in running their companies and in working with co-managers. When class members score low on Quiz 1 and lack command of how things work, they cant contribute much to team meetings or be influential in making decision entriessometimes they end up being ignored by teammates after numerous times of having to explain why their off-the-wall suggestions are a bad idea. You have the option to schedule Quiz 1 for completion as late as the second real decision round (Year 12) or, of course, not to schedule it at all. You can preview the questions in Quiz 1 by clicking on the link in the Instructor Support section of your Instructor Center web page. The default time limit for completing Quiz 1 is an ample 45 minutes, but there is a place to extend this limit when creating your schedule of decision rounds and assignments. The purpose of Quiz 2 is to prod students to read the on-line Help pages and gain full command of where the numbers in the reports are coming from and what interpretation should be placed on them. Quiz 2 consists of questions drawn from information provided on a subset of the on-line Help pages and concern the accounting principles used to allocate costs across regions and between branded and private-label production, how to interpret the shifts in exchange rates, how to calculate the financial and operating ratios contained in the each years reports, and certain other information pertinent to company operations. Students can make a score of 80 or higher on Quiz 2 simply by following the Quiz 2 instructions to print copies of certain Help pages prior to taking the quiz and then using these printouts to look up the correct answers and find the formulas they need for calculating such things as EPS, ROE, the current ratio, and the operating profit margin. Students who score below 70 on Quiz 2 dont have strong understanding of how to calculate or interpret the numbers in the company reports and the accounting principles on which the reports are based. You can preview the questions in Quiz 2 by clicking on the link in the Instructor Support section of your Instructor Center web page. Quiz 2 has a default time limit of 90 minutes. You have the option to schedule the deadline for Quiz 2 to coincide with the deadline for Year 14 or any year thereafter. It is recommended that the deadline correspond to Year 14 or Year 15 for two reasons. By Year 14 or Year 15 (after 1 or 2 practice rounds and 3 or 4 scored decision rounds), comanagers have had ample time to grasp what is going on, what the numbers in the company reports mean, and how they are calculated. Setting a later deadline for Quiz 2 completion simply allows less diligent co-

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managers to coast along in shoot from the hip stylethis serves no useful purpose. The more comanagers know about their company and the quicker they know it, the more they learn from their experience playing The Business Strategy Game. We suggest putting a 2.5% to 5% weight on Quiz 1 and a 5% to 7.5% weight on Quiz 2 in determining overall performance scores for each participant. Since both quizzes are open book, such weights can easily turn out to be grade boosters. Note: You can compare the scores in your class to the average scores earned worldwide on both quizzes by clicking the Vital Statistics link that appears near the bottom of the Instructor Resources box on your Instructor Center page when you log inthe average scores shown are for all quiz-takers worldwide during the specified period.

Should You Assign a 3-Year Strategic Plan? Any time after the first three scored decision rounds,
you have the option of requiring that each companys management team to prepare a 3-year strategic plan using the built-in strategic plan module. Preparation of a 3-year strategic plan involves (1) stating a strategic vision for the company in a brief paragraph, (2) establishing objectives for EPS, ROE, credit rating, stock price appreciation, and image rating for each of the next three years, (3) declaring what strategy the company will employ, (4) presenting data showing that the chosen strategy is either currently on track or will require substantial internal changes, and (5) preparing a projected income statement that lays out expected unit sales, revenues, costs, and profits for each of the four geographic regions and for the company as a whole for the each of the next three years. This exercise takes an hour or so to complete (depending on a teams diligence and speed in achieving consensus). You can explore the format and contents of the 3-year plan using the Preview 3-Year Strategic Plan link on the left side of your Instructor Center page. Having company-co-managers put together a 3-year strategic plan has multiple benefits: It prompts a companys management team to think strategically about the companys long-term strategic direction and future performance prospects rather than just running the company one year/decision round at a time. In the real world, managers have to worry about taking actions that will deliver good results for several years ahead. It gives company management teams practice in setting stretch objectives and then being held accountable for making any strategic and operating adjustments that may be needed to meet or beat the targeted levels of performance that shareholders are expecting (and that are built into the Investors Expectations scoring standard). It encourages each management team to wrestle with whether to make any strategy changes in light of growing demand and the likely moves of rival companies. It gives co-managers much needed practice in developing 3-year financial projections and exploring the profitability of alternative strategy scenarios, sales volumes, and so on. All-in-all, assigning a 3-year plan gives you a golden opportunity to drill class members in what is involved in preparing a 3-year plan, while at the same time having them experience the discipline of being held accountable for achieving the 3-year performance targets they establish. We do not provide an option to assign a 3-year plan before Year 14 for two reasons: 1. Co-managers use the most recent three years of actual results to help them come up with the pro forma income statement projections. Thus it takes results for Years 11-12-13 to provide them with enough data to use the 3-year plan option. 2. Until class members have run their company for 3 years and have a feel for the software, the athletic footwear marketplace, what rival companies are doing, and what their strategy is really going to be, they cant make reasonable estimates about what the future holds for their company. They need at least 3 years of historical financial and operating data to develop pro forma projections that are in the ball park of what is reasonable. It is up to you whether to require 1 or 2 plans. The first time you run BSG consider having companies do a single 3-year strategic plan starting in Year 14 or Year 15 or Year 16 (but make sure that the deadline for the plan is at least 3 years prior to the last decision round so that performance scores for all three years of the plan period can be generated). If you are having 10 decision rounds (through Year 20), there is time for 2 plans. The procedures and time involved are sufficiently modest that requiring a plan more frequently should not be ruled out, especially if the simulation is the centerpiece of the course and the main workload that students have. The initial plan

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can be due in Year 14 (for Years 14-15-16) or in Year 15 (for Years 15-16-17). A second plan can then be due in Year 17 (for Years 17-18-19) or else Year 18 (for Years 18-19-20). The deadline options for the 3-year strategic plan appear on the Decision Schedule page filled out during the Course Setup routine. Just click on the year you want a 3-year plan completed. When each company completes its plan, it is posted; you can view any companys 3-year plan using the Industry Reports item of the Administration Menu. The strategic plans are automatically graded on a scale of 1 to 100; scores are tied to whether a company meets or beats its stated performance targets for EPS, ROE, credit rating, image rating, and stock price for each of the three years of the strategic plan. The grading is based on the principle that a companys strategic plan was good if management met or beat the targeted levels of performance and if these targets contained some stretch. The thesis here is that company managers should not be rewarded for sandbagging and setting easily achieved performance targets. Nor should they be rewarded for setting pie-in-the-sky performance targets and then delivering a performance far short of the promised results. But at the same time, the scoring system does not require a company to pursue its declared strategy for a full three years no matter what. Each company is given the flexibility to modify its strategy of how best to compete against rivals at any time and to make any other operating adjustments. Indeed, in the real world most companies adapt their strategies and make operating adjustments as often as circumstances dictate. The actual scoring algorithm for the strategic plan exercise is described in a later section below and can also be accessed directly from your Instructor Center by clicking on the How the 3-Year Strategic Plan is Scored link on the bottom left of the screen.

Should You Require a Company Presentation at the Conclusion of the Simulation? A particularly effective way to wind up The Business Strategy Game experience and reinforce the learning that has taken place is to have the co-managers of each company prepare a presentation either to their Board of Directors or their shareholders. The class, the instructor, and perhaps invited guests from the business community can serve as board members and/or shareholders. Depending on the number of companies and the amount of time you want to allocate to company presentations (our suggestion is one 75-minute class period), the company presentations can be 5 to 15 minutes in length, with perhaps 5 minutes for Q&A. In our classes, we have all companies prepare a PowerPoint presentation and submit their files to the instructor for grading, but we call on several companies at random to make their presentations in class (just enough companies to fill out the class period). In an industry of 10-12 companies, having 4-5 companies make a presentation is usually sufficient, and it allows time for the instructor to sum up the lessons learned and obtain feedback on what class members think about their simulation experience.
The Company Presentation link that appears on the Assignments menu near the top of each company comanagers Corporate Lobby screen directs the management team to prepare a presentation that covers (1) their companys performance for all decision rounds, (2) their strategic vision for the company, (3) performance targets for the next year or two, assuming the simulation continued on, (4) their companys present strategy and how it has evolved, (5) which companies they consider to be their closest competitors, (6) the moves they would make over the next several years to win out over their close competitors and improve their companys performance and market standing, and (7) lessons learned. Company co-managers are given the following directions in putting together their presentation: Unless otherwise instructed, your presentation should include the following topics and slides: A brief review of the financial and strategic performance of your company during the time you and your comanagers have run the company. This review should consist of charts showing the following: o Trends in the companys annual total revenues o Trends in the companys annual earnings per share (EPS) o Trends in the companys annual return on equity investment (ROE) o Trends in the companys annual credit rating o Trends in the companys year-end stock price o Trends in the companys annual image rating

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o Trends in global unit sales (both branded and private-label footwear) o Trends in the companys global market share As you know, when you launch the Decisions and Reports program, there is a Performance Summary containing bar graphs showing your companys performance on each of the above eight performance indicators. To create charts showing your companys trends for these eight measures, simply click on the Copy to Clipboard button under each of the bar graphs for the final year of the simulation and paste the graph onto a PowerPoint slide (or you can paste the eight bar graphs into a Word file that you can print out for use in making transparencies). If you wish to create additional performance graphs, you can do so, but the above six bar graphs tell an adequate story about your companys historical performance. A slide describing your strategic vision for the company. A slide that shows what performance targets for EPS, ROE, credit rating, and image rating you and your comanagers would set for each of the next two years (assuming the simulation were to continue). You may also want to include global market share and/or stock price targets as well. A slide that sets forth your companys competitive strategy in branded footwear in some detail and how that strategy has evolved over the years you have managed the company. You may need to have more than one slide here if your companys strategy in branded footwear varies markedly from geographic region to geographic region or if your strategy for branded sales to retailers differs in important ways from your strategy for Internet sales. A slide that sets forth your companys competitive strategy in private-label in some detail and how that strategy has evolved over the years. More than one slide may be needed if your companys strategy in private-label footwear varies markedly from one geographic region to another. A slide showing your companys production strategy and work force compensation strategy A slide describing your companys finance strategy (as concerns dividends, use of debt versus equity, stock issues/repurchases, actions to achieve/maintain a strong credit rating, etc.) You should clearly describe your companys dividend policy during the period you have managed the company. Here, you should also set forth what sort of dividend increases, if any, you would likely consider paying out in the next two upcoming years (given the EPS targets you have established). A slide showing (1) those companies you consider to be your strongest/closest competitors in branded footwear as of the last year or two of the simulation and (2) those companies that are your strongest/closest competitors in the private-label segment of the marketplace. One or more slides detailing the actions you would take to out-compete these close rivals in the next two years (assuming the simulation continues for several more years). Since the actions may differ as between branded and private-label footwear, you may well need 2 slides here. A set of slides detailing the lessons learned about crafting a winning strategy and about what the managers of a company should or should not do for a company to be financially and competitively successful in a headto-head battle against shrewdly-managed rival companies. You should, of course, adjust the content of your presentation to conform to whatever topical outline that your instructor specifies. Thus, depending on what your instructor tells you about what items to address in your presentation, you may need to add slides covering other topics or delete coverage of some of the above suggested topics. It is a fairly simple matter for you to provide company co-managers with a different set of instructions and adjust the content of the presentation to suit your preferences. If you elect to require a company presentation, you will have to specify a deadline time on the Decision Schedule for having the presentation ready (probably no later than the class period when the presentations are to be given or perhaps even a few hours before). As indicated above, we suggest having each company provide a printout of their slides (at the time of the class presentations) or else e-mail you their PowerPoint presentation file (at whatever time you specify). You will need to grade the presentation. There is a space provided in your online Individual Grade Book to enter Company Presentation grades for each company co-manager (this space only appears if you check the box to require a Company Presentation on your decision schedule).

Should You Require an End-Game Peer Evaluation? At the end of the BSG exercise, it is highly
recommended that you have each co-manager complete peer evaluations of their co-managers and also

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do a self-evaluation (using the same form). Co-managers responses to the comprehensive 12-question peer evaluation form provide you with feedback about how well a companys management team functionedattendance at meetings, teamwork, knowledge of company operations, contribution of ideas and suggestions, and leadership. The answers are scored and recorded in your online grade book; the peer evaluation grades range up to 100 points. Generally, a big percentage of company co-managers will earn peer evaluation scores of 85 or better, signaling that their colleagues view their effort index and contributions as quite satisfactory and maybe even superb (in the case of scores in the high 90s). Scores below 80 should usually raise a red flag and merit inspection to see discover the causes. You have the ability to click on any of the peer evaluation scores for any co-manager and review the entire peer evaluation. If you let class members know that you will review the peer evaluations (only the low scores really need to be inspected individually), then you have a powerful tool for identifying low contributors. The availability date/time for the post-game peer evaluations should usually correspond to the deadline for the last decision round, but you can make the evaluation exercise available later or earlier if you wish. While co-managers can review the content of the peer evaluation at any time, they are not allowed to complete the peer evaluations until they become available. On the decision schedule, you also have the option to require completion of a mid-game peer evaluation as well as a post game evaluation. Employing a mid-game evaluation has merit because it provides you with an early warning of co-managers who are sub-par contributors; this gives you an opportunity to intervene and take corrective action before all decisions and assignments have been completed. If you require a mid-game and post-game peer evaluation, then both peer evaluation scores will be automatically recorded in your online grade book. You have the flexibility to assign percentage weights to the peer evaluation scores in calculating each participants overall performance on the simulation exercise, if you so desire. A percentage ranging from 2.5% to as much as 10% might be in orderbut you should use caution in placing much weight on the peer evaluation scores. While the scores a co-manager receives on the peer evaluations done by his/her teammates are certainly a useful indicator of overall effort and contribution, some class members may not be candid and objective in their evaluations for fear of hurting a co-managers grade or having the contents of a less-than-commendable evaluation get back to their teammates. So you should not be surprised if class members often overrate the performance and contributions of their colleagues. If you require peer evaluations, it is wise to make it clear to the class that the evaluations are confidential reports to be seen only by you (this will ease their minds about being honest in answering the peer evaluation questions and lessen the chances of higher-than-deserved scores). You may also want to be deliberately vague about what you plan do with the evaluations, except to say you will definitely look them over and that everyone is expected to complete them in a professional and honest manner. The veiled threat that a bad peer evaluation could carry adverse grade consequences may be enough to cause weak students to think twice about trying to ride co-managers coattails to an unearned grade. The potential for some co-managers to award overly high scores to their teammates is reason to avoid giving the scores much (if any) weight in the grade calculations. Even so, if you use the peer evaluation scores in conjunction with the rather detailed data provided on each co-managers Activity Log (which shows the frequency and length of log-ons, how many times decision entries were saved to the server each decision round, and how many times each set of reports was viewed), you have a pretty good basis for determining if a co-manager was a strong, adequate, or weak contributor. When a comanager (1) receives very bad peer evaluations and (2) has an Activity Log indicating minimal use of the web site, some sort of grade penalty may be in order. A case can be made that it is inherently unfair for low contributors or absentee co-managers to receive a high grade when their peer evaluation scores and Activity Logs signal that such a grade is likely to be unearned or undeserved.

The Course Setup Procedure


Setting up The Business Strategy Game for your course entails: 1. Specifying a Course/Section ID and indicating the whether the participants will be primarily undergraduates, graduate students, corporate trainees, or other. 2. Specifying the number of companies you want to create for your class members to runa minimum of 4 companies and a maximum of 12 companies can compete head-to-head in a single group or industry. You can assign 1 to 5 class members to run each company (assigning 3-4 persons to manage each

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company is recommended). If you need more than one industry for your course (because you want to divide the class into more than 12 company teams), you have the option to do so. 3. Specifying deadlines for the practice and regular (scored) decision roundsyou can have either 1 or 2 practice rounds and anywhere from 4 to 10 decision rounds that are scored and used in calculating individual grades for the simulation exercise. As part of creating a decision schedule, you will also need to indicate whether you want to have students (a) complete either or both of the two optional quizzes, (b) do one of two 3-year strategic plans for their company, (c) prepare a PowerPoint presentation about their companys performance and operations at the conclusion of the simulation exercise, and (d) complete Peer Evaluations of their co-managers. You always have the option to come back to this screen for scheduling decision rounds and other assignments later and make changes in the assignments and/or the deadline dates. 4. Generating and printing the company registration codes that you will need to give each class member to use in registering for the simulation at www.bsg-online.com. You must give each class member on each team/company the appropriate company registration code prior to having them register because this code is used to (1) enroll the student in your class, (2) designate the student as a comanager of the assigned company, (3) restrict a co-managers access to only the industry and company you assigned them, and (4) enter the students name in your online grade book. When students register, they will be asked to enter the company registration code you provide themclass members cannot register without the registration code for their particular industry and company. Thats all there is to it. Youll find that you can complete the Course Setup routine in 15-25 minutes the first time you use the simulation. Once you have used BSG and are comfortable with how you want to administer the exercise, it should take no more than 15 minutes to have everything ready to go. Remember to take a printout of the company registration codes to class and make sure each student is given the appropriate code for their assigned company. A good procedure is to give each class member a copy of the printout of the company registration codes and have them circle the code for the company they have been assigned to manage. Each different company goes by a letter of the alphabet (A, B, C, etc.). Each co-manager of Company A will need the registration code ending in the letter A to complete the registration process; each co-manager of Company B will need the code ending in B, and so on. If you have 6 companies, then the corresponding company letters appearing at the each of each code number will be A, B, C, D, E, and F. Once co-managers register, they can create a name for their company that begins with their corresponding company letter.

How Do Class Members Register and Gain Full Access to the BSG Website?
When class members complete the registration process at www.bsg-online.com, they gain instant access to the BSG web site, ability to view/print the Players Guide, and full navigation privileges to everything needed to run their company and complete the various optional assignments. For co-managers to register, you will first have to provide them with their Company Registration Code in the manner discussed in the prior section. Registration is accomplished in one of three ways: 1. Credit/Debit Card RegistrationWhen a student creates a BSG account, the registration fee plus applicable sales taxes can be paid online by credit/debit card (Visa, MasterCard, Discover, or American Express) during the registration process. (Credit card payment is currently used by about 75% of all registrants.) Rest assured that the BSG Web site for credit card payment is fully secured; credit card registrants will receive an e-mail receipt confirming their payment. 2. Prepaid AccessIf you adopt a McGraw-Hill text or create a custom McGraw-Hill text for your course, you have the option of "packaging" prepaid use of The Business Strategy Game web site with your text. A text-simulation package is ordered through your local book store using a special ISBN code provided by McGraw-Hill. When your book store places a package order, McGraw-Hill will shrink-wrap a Prepaid Access Code card for the simulation with the new or custom text and ship it to your book store where class members purchase the text-simulation package in the normal manner. Class members then register online using the Prepaid Access Code printed on the card. However, you should be aware that aggressive bookstore markups often result in class members paying the book store as much as $10-$15 more for BSG in a combination text-simulation package than they would pay via credit card at the website. To obtain the special ISBN for the text-simulation package and place a bookstore order, please contact your local McGraw-Hill account representative, e-mail CustomerService@bsg-online.com, or call the BSG instructor support number (205-722-9149).

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3. Direct-BillingIf your college/university includes the cost of text books and other course materials in the tuition fee for the course (and a McGraw-Hill text-simulation package has not been ordered for your course), then you or an appropriate school official can obtain Prepaid Access Codes for student registration (one for each class member) from CustomerService@bsg-online.com and your department/college/university can be direct-billed, with payment by credit card, check, or wire transfer as preferred. For your convenience, we can supply you or your school with the desired number of Prepaid Access Codes within minutes of receiving a request (before even receiving an invoice). For more information on this option, please call or e-mail simulation co-author Greg Stappenbeck at (205)-7229149 or greg@bsg-online.com). If some of your students do not have a credit card or a Prepaid Access Code, the easiest way for them to register is to arrange to use a friends or co-managers credit card and reimburse them directly with cash or a check.

The Corporate Lobby Web Page for Company Co-Managers. Upon completing the registration
process, company co-managers are immediately transferred to their companys Corporate Lobby page. Each time they log-on at www.bsg-online.com (by entering their user name and password), they are sent directly to their Corporate Lobby page. The Corporate Lobby is the gateway or hub that co-managers use to access all needed information and work on all assigned tasks. All company co-managers have 24/7/365 access to their Corporate Lobby on any Windows-based PC or Apple Mac connected to the Internet, provided the computer has a Web browser (such as Internet Explorer or Firefox or Safari) and Flash 10.3 (or later)students using a computer without the needed version of Flash already installed will be automatically directed to the Flash site where the latest version can be downloaded and installed free of charge in a few minutes. All co-managers can be logged on simultaneously from whatever location. Team members running the same company can use the integrated on-screen chat system or phones to collaborate when working online at the same time from different locationsthe built-in chat feature make the simulation ideal for distance learning courses and also facilitates co-manager collaboration when working from different locations. The Corporate Lobby prominently displays the last date and time of every co-managers log-in. If another logged-on co-manager clicks on the Save button to save new decision entries to the BSG server, the other logged-in co-managers are notified of such an action. The very next time the Save button is pressed the comanager is given the choice of (1) overriding the first co-managers saved decision entries by saving their own decisions to the server or (2) importing the first co-managers decisions onto their decision screens and overriding their own entries. All of this facilitates coordinating decision entries when co-managers are simultaneously online at different locations.

How Much Should the BSG Exercise Count in the Total Course Grade?
Whether class members take the simulation exercise seriously hinges in large part on whether you make performance on BSG count enough in the overall course grade to get their attention. As a general rule, we recommend having performance on the simulation count at least 20% of the overall course grade and probably no more than 50% of the total grade. If it counts less than 20%, class member effort is weakened to an undesirable extent and some of the learning potential is lost. If it counts more than 40%, then the BSG exercise may take something away from the emphasis you want to give to other aspects of the course. However, growing numbers of users are making the simulation the dominant centerpiece of their courses (particularly in online and distance learning courses where case analysis is difficult to use effectively). When BSG functions as the primary part of the course (aside from the content of the chapters in the textbook you have adopted), then counting the simulation as 50-60% (or more) of the final grade is reasonable, given that you can use the quizzes, one or two 3-year strategic plan assignments, and perhaps an end-of-simulation presentation to an invited panel of 3 or 4 persons (who act as a company board of directors) as a substitute for assigning students a larger number of cases to analyze. A related grading issue is how much each of the various assignments within BSG should be weighted. You have full control over these weights and can change them at your pleasure by entering different weights at the top of the columns of your Individual Grade Book. A table of suggested weights is presented below. We suggest caution in placing less than a 70% weight on overall company performance, since lower weights weaken the incentive of company co-managers to make businesslike decisions and do the requisite analysis and strategic thinking to boost their companys performance.

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Performance Measures Overall company performance on the 5 scoring measures Quiz 1 (a relatively easy quiz on the content of the Players Guide) Quiz 2 (a harder quiz covering important aspects of company operations and financial outcomes) Performance on strategic plan #1 Performance on strategic plan #2 Company presentation Peer evaluation scores of comanagers N.R. = not a required assignment

Option 1 85.0% 2.5% 7.5% N.R. N.R. N.R. 5.0%

Option 2 80.0% 3.0% 7.0% 5.0% N.R. N.R. 5.0%

Option 3 75.0% 2.5% 5.0% 5.0% N.R. 10.0% 2.5%

Option 4 75.0% 2.5% 5.0% 2.5% 5.0% 5.0% 5.0%

Option 5 70.0% 2.5% 5.0% 3.0% 7.0% 10.0% 2.5%

It makes sense to place a significantly higher weight on Quiz 2 as opposed to Quiz 1, because Quiz 2 is harder and tests individual understanding of important aspects of company operations. We also suggest weighting a second strategic plan higher than the first plan because (1) co-managers are more knowledgeable about how to do a good plan the second time around, (2) they have more experience in appraising the impact of changing market conditions, and (3) they have more experience in setting performance targets and trying to meet or beat them.

How Company Performances Are Scored


The scoring procedure is tied to how well each BSG company is able to meet or beat the 5 performance targets which board members have set for the companys management team:

Grow earnings per share at least 7% annually through Year 15 and at least 5% annually thereafterThe
Board of Directors believes these EPS growth targets are well within reason given that the global footwear market is expected to grow 7-9% annually through Year 15 and 5-7% annually in Years 16-20. Board members and shareholders believe a winning strategy should, at a minimum, be able to deliver EPS growth at the low end of the market growth percentages. All companies had an EPS of $2.50 at the end of Year 10 (when new management took over). 17.3% ROE in Year 10. Return on average equity is defined as net income divided by the average of total shareholder equity at the beginning and end of the year. The companys Balance Sheet reports the change in equity investment from the beginning of the year to the end of the year and shows the balance sheet entries where the change in shareholder equity occurred.

Maintain a return on average equity investment (ROE) of 15% or more annually. All companies had a

Maintain a B+ or higher credit rating. All companies had a B+ credit rating at the end of Year 10. Achieve an image rating of 70 or higher. The image rating for each company is based on (1) its

branded Styling/Quality (S/Q) ratings in each geographic region, (2) its market shares for both branded and private-label footwear in each of the four geographic regions, and (3) company actions to display corporate citizenship and conduct operations in a socially responsible manner over the past 4-5 years. All companies had an image rating of 70 at the end of Year 10.

Achieve stock price gains averaging about 7% annually through Year 15 and about 5% annually

thereafter. Such stock price gains are within easy reach if the company meets or beats the annual EPS targets and pays a rising dividend to shareholders. All companies had a stock price of $30 per share at the end of Year 10. Stock price is a function of EPS growth, ROE, credit rating, dividend per share growth, and managements ability to consistently deliver good results (as measured by how many of the 5 performance targets are achieved over all completed decision rounds).

The default weights placed on the five performance targets are 20% each. The five weights translate into 20 points out of 100 for each of the 5 performance measures, with the sum of the points adding to a total of 100 points. There is an option on your Administrative Menu for each industry that allows you to alter these weights however you see fit. The scoring weights selected are reported to all

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company co-managers in the narratives at the bottom page 1 of the Footwear Industry Report and also in the narratives showing the company scores on each scoring variable on pages 2 and 3 of the Footwear Industry Report. Hence, class members will be well aware of what the weights are. Using the assigned weights (or corresponding number of points out of 100), each companys performance on the 5 measures is tracked annually and company performance scores are calculated from two different angles: the investor expectations standard and the best-in-industry standard. Special Note: The scoring procedures described below may seem more complicated than they really are because we are providing full details and explanations of how the scoring worksin truth a companys overall performance cannot be fairly or accurately gauged by keeping it simple and looking at just a couple of performance measures. A balanced scorecard for determining how well a company is doing financially and strategically has to be multi-faceted and somewhat sophisticated in order to look at a companys performance from several perspectives and angles. The BSG scoring methodology, introduced in 2004 and now used for thousands of participants, has an exceptionally good, time-tested track record. The scoring synopsis provided on the scoreboard pages (pages 1, 2, and 3) of the Footwear Industry Report is straightforward and easily graspedwe get few questions about how the scoring works. Company co-managers can discern exactly why their scores are high or low relative to the other companies, and it is always indisputably clear which companies are the industry leaders and which companies are being outperformed.

The Investor Expectations (I.E.) Scoring Standard. The Investor Expectations Standard involves
calculating an annual Investor Expectation Score based on a companys success in meeting or beating the five investor-expected performance targets each year. There is also a Game-to-Date or all-years Investor Expectation Score that shows a companys success in achieving or exceeding the expected performance targets over all years of the exercise completed so far. Some important aspects of how the Investor Expectation (I.E.) Scores are calculated are summarized below:

Meeting each expected performance target is worth some number of points based on the scoring weight

you select (the default scoring weightswhich we recommend usingare 20% or 20-points each). For instance, if the scoring weight for EPS (or ROE or stock price or image rating or credit rating) is 20%, meeting the EPS (or ROE or stock price or image rating or credit rating) target earns a score of 20 on the EPS (or ROE or stock price or image rating or credit rating) performance measure.

Beating the EPS, ROE, stock price, and/or image rating targets are worth point bonuses of 0.5% for each

1.0% that a companys actual performance exceeds the expected performance for EPS, ROE, stock price, and image rating, up to a maximum 20% bonus for each measure. For example, if a company achieves an EPS of $6.00 when the target is $4.00 and if EPS carries a 20-point weighting, then the company will receive an EPS score of 24 (because it beat the target by 50% and qualifies for the maximum 20% bonus over the 20-points awarded for just matching the EPS target). Bonus points are also awarded for credit ratings above B+, with a full 20% point bonus being given for an A+ rating. score for that performance measure between 0 and the point maximum for that measure, with the score depending on the percentage of the target achieved. For instance, if a company achieves a stock price of $20 at a time when the stock price target is $50, then the companys score on the stock price target (assuming a 20% weight and thus 20 possible points) would be 8 points (40% of the 20 points awarded for meeting the stock price target).

Failure to achieve the investor-expected target for EPS or ROE or stock price or image rating results in a

If a companys EPS is negative, no points are awarded toward meeting investor expectations for EPS. If in a given year a company has a negative ROE, no points are awarded on the ROE measure. If the point weighting for credit rating is 20 (which equates to a maximum of 24 points including the
bonus), then the various possible credit rating scores are as follows:

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A+ A A B+ B B C+ C C

24 points 23 points 22 points 20 points 16 points 12 points 8 points 4 points 0 points

The sum of a companys scores (including bonus points) on each of the 5 investor-expected targets

equals its annual I.E. Score. Exactly meeting each of the 5 performance targets produces an I.E. Score of 100. Beating the EPS, ROE, stock price, and image rating targets by 20% or more and earning an A+ credit rating results in a maximum achievable I.E. Score of 120. years completed versus the average of the EPS targets for all years completed, (2) its weighted-average ROE for all years completed versus an all-year or ongoing ROE average of 15%, (3) an average of its image rating for the 3 most recent years as compared to an ongoing, every-year image-rating target of 70, (4) its most recent years stock price versus the most recent years stock price target, and (5) its most recent years credit rating versus the ongoing credit rating target of B+, as summarized below: o Game-to-Date I.E. Scoring for EPS is based on how each companys weighted-average EPS for all years completed stacks up against the average of the EPS targets for all years completed. Companies that meet the all-year weighted-average EPS target receive a score equal to the EPS point weighting; companies that beat the weighted-average EPS target receive additional points of up to 20% greater than the assigned scoring weight, and companies that fall short of the weightedaverage EPS target receive scores equal to the fraction of the EPS target that was achieved. More details are provided in the Help(?) section for p. 2 of the Footwear Industry Report where game-todate EPS scores are reported. o Game-to-Date I.E. Scoring for ROE is determined by how each companys weighted average ROE for all years completed stacks up against the all-year ROE average target of 15%. Companies that meet the all-year 15% average ROE target receive a score equal to the ROE point weighting; companies that beat the 15% ROE target receive additional points of up to 20% greater than the assigned scoring weight, and companies that fall short of the 15% target receive scores equal to the fraction of the 15% ROE target that was achieved. More details are provided in the Help(?) section for p. 2 of the Footwear Industry Report where game-to-date ROE scores are reported. o Game-to-Date I.E. Scoring for Stock Price hinges only on each companys most recent years stock price, not some all-year average. The latest stock prices are used to measure the game-to-date I.E. score for stock price because a companys latest stock price is a function of EPS growth, ROE, credit rating, dividend per share growth, and managements ability to consistently deliver good results, and thus includes a heavy long-term element. Companies that meet the most recent years stock price target receive a score equal to the stock price point weighting; companies that beat the most recent years stock price target receive additional points of up to 20% greater than the assigned scoring weight, and companies that fall short of the most recent years stock price target receive scores equal to the fraction of the stock price target that was achieved. More details are provided on the Help(?) section for p. 2 of the Footwear Industry Report where game-to-date I.E scores for stock price are reported. o Game-to-Date I.E. Scoring for Credit Rating is keyed to how each companys most recent credit rating compares against the ongoing rating of B+. Only the latest years credit rating is used to measure the game-to-date credit rating score, as opposed to an all-year average credit rating, because a companys latest credit rating is largely reflective of its long-term financial condition and the overall balance sheet strength that management has engineered to date. The game-to-date I.E. scores for credit rating are always the same as for the current-year scores because both are based on

A companys Game-to-Date Investor Expectation Score is based on (1) its weighted-average EPS for all

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the most recent years credit rating. More details about the credit rating scoring are provided on the Help(?) section for p. 3 of the Footwear Industry Report. o Game-to-Date I.E. Scoring for Image Rating is based on how each companys average image rating for the most recent three years stacks up against the al-year average target of 70. A 3-year average image rating is used to measure game-to-date performance, as opposed to an all-year average, so as not to burden a companys performance by image ratings that are not representative of the image and reputation it has recently achieved with its strategy. Companies whose average image rating for the most recent 3 years equals the 70 image rating target receive a score equal to the image rating point weighting; companies with 3-year average image ratings above 70 receive additional points of up to 20% greater than the assigned scoring weight, and companies with 3-year average image ratings below 70 receive scores equal to the fraction of the image rating target of 70 that was achieved. More details are provided on the Help(?) section for p. 3 of the Footwear Industry Report, where the gameto-date image rating scores are reported. The sum of a companys Game-to-Date scores on each of the five scoring measures equals its total Game-to-Date I.E. Score. Special Note: The Game-to-Date I.E. scores are thus definitely not equal to an average of the annual I.E. scores.

Both annual and Game-to-Date Scores of 100 to 120 are quite excellent, scores of 90-99 are very good,
scores of 80-89 are good, scores of 70-79 are fair, and scores below 70 reflect consistently sub-par results in meeting the targets that investors expect and that company Board of Directors set for management to achieve.

The Best-in-Industry (B-I-I) Scoring Standard. The best-in-industry or B-I-I standard concerns how well each company performs relative to the best-in industry performer on 4 measuresEPS, ROE, image rating, and stock price and how close each company comes to the ultimate credit rating of A+. Again, the performance scores are based on the weights/points assigned to each of the 5 performance measures, with the sum of the points on the 5 measures adding to 100. The Best-in-Industry Standard entails assigning the best-performing company the highest number of points and then assigning each remaining company a lesser number of points according to what percentage of the leaders performance they were able to achieve. For instance, if ROE is given a weight of 20% (20 points), an industry-leading ROE performance of 25% gets a score of 20 points and a company with an ROE of 20% (which is 80% as good as the leaders 25%) gets a score of 16 points (80% of 20 points)the B-I-I scores for EPS, stock price and image rating work in precisely the same manner. The procedure is slightly different for the credit rating measureeach credit rating grade is tied to the number of points your instructor assigns to the credit rating (an A+ rating always gets a best-in-industry score equal to the instructor-chosen maximum, with the grades for other credit ratings scaled down all the way to 0 for a C rating).
Each companys Best-in-Industry (B-I-I) Score is equal to its combined point total on the five performance measures. In order to receive a score of 100, a company must (1) be the best-in-industry performer on EPS, ROE, stock price, and image rating, (2) achieve the targets for EPS, ROE, stock price and image rating set by the companys Board of Directors, and (3) have an A+ credit rating. B-I-I scores of 80 to 100 reflect good-to-excellent performance; scores under 50 should cause company co-managers great concern and signal the need for immediate strategy improvement. Below are some important aspects of how the Best-in-Industry Scores for a given year are calculated:

The best-in-industry scoring standard is based on a maximum score of 100 points, with each scoring
variable carrying a 20-point rating (unless you alter the 20% default weights). To get a score of 100, a company has to be the highest performing companytermed the best-in-industry performeron all five performance measures during the year, meet or beat the EPS, ROE, stock price, and image rating targets, and have an A+ credit rating.

The best-in-industry performer on each measure earns a perfect score (the full number of points based

on the chosen point weightingsprovided the industry leaders performance on that measure equals or exceeds the performance target established by company Boards of Directors). Each remaining company earns a fraction of the points earned by the best-in-industry performer that is equal to its performance (on EPS, ROE, stock price, and image rating) divided by the performance of the industry-leading company (on EPS, ROE, stock price, and image rating). For instance, if ROE is given a weight of 20 points, an industry-leading ROE performance of 25% gets a score of 20 points and a company with an ROE of 20%

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(which is 80% as good as the leaders 25%) gets a score of 16 points (80% of 20 points). Likewise, if EPS is given a weight of 20 points, an industry-leading EPS performance of $5.00 gets a score of 20 points and a company with an EPS of $2.00 (which is 40% as good as the leaders $5.00) gets a score of 8 points (40% of 20 points).

If the best-in-industry performers EPS, ROE, stock price, or image rating is below the initial Year 10

performance base, the industry-leading company is not awarded a perfect score (the maximum number of points) but rather a percentage of the maximum score that equals the leaders EPS, ROE, stock price, or image rating as a % of the corresponding number for the base year (Year 10). This is done to prevent a company with the highest average EPS, ROE, stock price, or image rating from being awarded a high Best-in-Industry Score when its performance on EPS, ROE, stock price or image rating actually falls short of the initial performance levels established by company through Year 10. In all such instances, each remaining company will earn a fraction of the points earned by the best-in-industry performer, with that fraction being equal to its performance (on EPS, ROE, stock price, and image rating) divided by the performance of the industry-leading company (on EPS, ROE, stock price, and image rating). credit rating grade from A+ to C carries a certain number of points that scales down from the maximum number of points for an A+ credit rating to 1point for a C rating. If the credit rating weight is 20 points out of 100, the B-I-I point awards for credit rating are as follows: A+ A A B+ B B C+ C C 20 points (or 100% of the point weighting) 19 points (or 95% of the point weighting) 18 points (or 90% of the point weighting) 17 points (or 85% of the point weighting) 14 points (or 70% of the point weighting) 11 points (or 55% of the point weighting) 8 points (or 40% of the point weighting) 4 points (or 20% of the point weighting) 1 point (or 5% of the point weighting)

The procedure for assigning best-in-industry scores is a bit different for the credit rating measure. Each

All companies that lose money in any given year and end up with a negative EPS automatically receive a
best-in-industry EPS score of 0 points.

Similarly, companies with a negative ROE have a best-in-industry ROE score of 0 points. Each companys B-I-I score equals its combined point total on the five performance measures. Best-in-Industry performance scores of 90-99 are excellent, scores of 80-89 are good to very good,

scores of 70-79 are fair to good, scores of 60-69 are weak to fair, and scores below 60 reflect a performance roughly 40% or more below that of companies with scores in the 90swhich says that such companies were outperformed by other companies in the industry by a significant margin.

The highest possible Best-in-Industry (B-I-I) Score is 100, earned only if a company is the best performer on EPS (with an EPS equal to or above the target), the best performer on ROE (with an ROE of at least 15%), the best performer on stock price (with a stock price equal to or above the yearly target), and the best performer on image rating (with an image rating of at least 70) and also has an A+ credit rating. Combining the Annual and Game-to-Date I.E. Scores and B-I-I Scores into Overall Scores. The scoring includes both an annual and a game to date Overall Score for each company. These scores are determined by combining each companys Investor Expectation Score and the Best-in-Industry Score into a single score using whatever weighting you wish (the default weightingwhich we strongly recommendis 50-50). The Annual Overall Scores for the various companies are a weighted average of their respective annual I.E. scores and the annual B-I-I scores, while the Game-to-Date Overall Scores are a weighted average of the game-to-date I.E. scores and the game-to-date B-I-I scores. Since I.E. scores can range as high as 120, it is common for the Overall Scores of the very best-performing companies to be greater than 100. Overall Scores greater than 100 are clearly indicative of superior company performance and are definitely worthy of an A or A+. As a general rule, we think that companies with an overall performance score of 90 or above at the conclusion of the decision rounds should get anywhere from an A to an A+ on this portion of the BSG exercise. Companies with overall game-to-date scores of 80-89 should get a B to a B+ (or higher if there are no companies with scores of 90 or more).

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Companies with an overall performance score of 70-79 above should get a grade in the C range (or higher depending on how many companies have higher scores). You may find it desirable to scale the company grades if competition turns out to be so fierce or cutthroat that companies in the industry cant earn profits that meet investors performance expectations and thus end up with low overall game-to-date scores. In most of our classes, we end up scaling the performance scores of companies with overall scores below 70, but there is usually at least one company with a score above 90 (clearly meriting an A)hence scaling the grades on the upper end of the industry rankings is typically unnecessary. The latest Game-to-Date I.E. scores, Game-to-Date B-I-I scores, Game-to-Date Overall Scores, and industry rankings (based on the Overall Scores) are shown on the same page as the Administration Menu for each industry you have created for your class or classes. A Scoreboard Box containing the same information is always prominently displayed on each companys Corporate Lobby page (the first screen they see when they log on at www.bsg-online.com). Moreover, after each decision round, all company comanagers can view or print a complete Company Scoreboard showing each companys performance on every aspect of the scoring, including all the scoring weights. The Help sections for each page of the 3-page Company Scoreboard provide detailed, easy-to-understand explanations of the scoring so company comanagers should encounter no mystery factor about how the scoring works or where each company stands in the industry performance rankings.

Bonus Point Scoring Awards. Every decision round, companies have the opportunity to qualify for two
special bonus point awards that can boost their companys overall game-to-date score. Both bonus awards are a part of the simulation scoreboard, are calculated and awarded automatically to qualifying companies, and shown as an addition or adjustment to a companys overall score. Heres what the two bonus point awards involve:

Bulls Eye Award (awarded annually for accurately projecting company performance) -- One bonus point is added to a companys game-to-date score when (1) the companys actual total revenues are within 5% of projected total revenues, (2) the companys actual EPS is within 10 or 5% of projected EPS, and (3) the companys actual image rating is within 4 points of the projected image rating. To qualify for the Bulls Eye Award in a given year a company must achieve all three of the above requirements for that year.
o o o o

Standard rounding rules apply to the 5% calculations for revenues and EPS. There are no decimal points involved in the calculation and reporting of a companys Image Rating. No partial bonus points are awarded when just one or two of these three conditions are met. There are as many 1-point Bulls Eye bonus point awards as there are companies that meet all three conditions. There is no limit on the number of Bulls Eye Awards a given company can receive. Hence receiving a Bulls Eye Award for each of the various decision rounds can significantly impact a companys overall score. While Bulls Eye Award statistics are provided during the practice rounds for illustrative purposes, any awards are erased after the practice roundsin other words, any Bull Eye Awards during the practice rounds do not count and will not be included in the bonus-point additions to a companys final game-to-date score. The total bonus points accumulated by each company and the bonus-point-adjusted overall score for each company are shown in the bottom section of page 1 of the Footwear Industry Report where the Overall Game-to-Date company scores appear.

Leap Frog Award (awarded annually for most improved overall current-year performance score) Beginning in Year 12, one bonus point is added to a companys overall game-to-date score when the companys current-year score shows the biggest improvement over its current score for the prior year (based on number of points, rather than percentage improvement) in comparison to the score gains of all other companies in the industry.
o o

The first Leap Frog Award is given in Year 12 (since it takes two years of results for a company to show improvement over its prior years results). In case two or more companies tie for the biggest point-improvement in overall score, each company will receive a 1-point Leapfrog Award bonus.

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In the rare instance where all companies fail to improve their current scores from one year to the next (indicated by a negative year-to-year change in overall score for all companies in the industry), a Leap Frog bonus is not awarded. The total bonus points accumulated by each company and the bonus-point-adjusted overall score (including both Bulls Eye and Leap Frog bonuses) are shown in the bottom section of page 1 of the Footwear Industry Report where the Overall Game-to-Date company scores appear.

The Bulls Eye and Leap Frog awards accomplish three worthwhile purposes: 1. Provide an additional element of interest and excitement for students/participants when the performance outcomes are generated as the deadline for each decision-making round passes. 2. Spur company co-managers to put more thought and analysis into making accurate projections of upcoming-year outcomes and searching for a strategy and decision combination with the most realistic chance of producing good year-over-year overall improvement (just as occurs in real-world companies). Students will certainly appreciate being rewarded when their efforts to accurately anticipate their companys performance or to achieve a bigger jump in overall score than rival companies are successful. 3. Give company-teams an opportunity to enhance their overall score via measures outside the five standard simulation scoring variables (EPS, ROE, Stock Price, Credit Rating, and Image Rating). This may serve as an additional incentive for companies not currently challenging for the industry lead. Theres a page in the Footwear Industry Report (page 3b) devoted exclusively to reporting the bonus points awarded to all companies across all the decision roundsthe accompanying Help pages provide students with detailed explanations of how the Bonus Point awards are calculated. Since the total bonus points accumulated by each company and the bonus-point-adjusted overall score for each company are shown on page 1 of the Footwear Industry Report, all class members and the Instructor can readily track the status and impact of the bonus point awards throughout the simulation exercise. By default, the Bonus Point Scoring Awards are enabled when you complete the Course Setup procedure and set up the simulation exercise for your class. However, if you wish, you can disable the awarding of bonus points by unchecking the Bonus Awards box that appears in the Company Performance Grade Book (which is accessed from your Administration Menu). We strongly urge that you utilize the bonus point scoring feature at least initiallyeven if you are skeptical about its value. We are quite confident that your class members will enthusiastically applaud its use and that you will come to see the merits of the bonus point awards.

What to Do If You Decide to Alter the Default Scoring Weights. The default weights for the five
performance measures on which each company is scored were set at 20% each because a 20% weight for each of the five variables constitutes a balanced scorecard that is in reasonably close accord with judging the performance of real-world companies. However, you can alter these weights any time you see fit, using item F on the Administration Menuthe details are presented in the following section.

What to Do If You Want to Change the 50-50 Default Weights for the Two Scoring Standards.
As explained above, the default weights for the 2 scoring standards in The Business Strategy Game are 50% for the Investor Expectations Standard and 50% for the Best-in-Industry Standard. Other alternatives include 67%-33%, 33%-67%, 75%-25%, 25%-75%, 80%-20%, or 20%-80%. Of course, if you want to use just one of the standards, you can place a weight of 100% on that standard and a 0% weight on the other. To select weights other than 50-50, you will need to go to the online grade book (item C on the Administrative Menu), click on the Company Grade Book link, enter the desired weights for the 2 scoring standards in the boxes near the top of the grade book, and press the Save buttonthe weighted average performance scores in the right column of the grade book will automatically be recalculated and the Overall Scores in the Scoreboard box on your Industry Menu page and on each companys Corporate Lobby page will be based on the new weights.

Concluding Comments about Scoring Company Performance. One very important point about
the BSG scoring methodology warrants emphasis: it is a companys overall score that matters (how close company scores are to 100-120 in the case of the Investor Expectations Standard and how close they are to 100 in the case of the Best-in-Industry Standard), not whether a company is in first or last place. There will always be a last place company, but what is truly telling is whether it is in last place with a score of 85 (which clearly signals a strong performance and a deservedly good grade) or in last place with a score of 37 (which clearly signals a poor performance and possibly a lower grade).

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How Each Companys Performance on the 3-Year Strategic Plan Is Scored


The strategic plans are automatically graded on a scale of 1 to 100; scores are tied to whether a company meets or beats its stated performance targets for EPS, ROE, credit rating, image rating, and stock price for each of the three years of the strategic plan. The scoring is based on the principle that a companys strategic plan was good if management met or beat the targeted levels of performance and if these targets contained some stretch. The thesis here is that company managers should not be rewarded with a good grade for setting pie-in-the-sky performance targets and then delivering a performance far short of what was promisedthere can be no applause whatsoever for a strategic plan that over promises and under delivers. At the same time, though, there is no glory to be gained by sandbagging and setting easily achieved performance targets. The following point system was developed to assign higher scores to those plans where stretch targets were met and lower scores to plans with low performance targets and plans where actual performance was below established targets (while the scoring system may seem complicated, the various point requirements and conditions were necessary to cover the differing circumstances of different companiesexperience indicates that the explanations provided to co-managers allow them to grasp the scoring pretty readily):

14 points for setting any one target below the Investor Expectation Standard and then meeting or beating

the target (70 points max. if applied to all 5 targets for each year of the plan). Thus, setting and achieving sub-par objectives results in a maximum performance score of 70. Under no circumstances are points awarded for setting and achieving a target below a B credit rating or below an image rating of 50. Moreover, the points awarded to struggling companies that will have a hard time even reaching "rockbottom" performances of $1.00 per share, a 10% ROE, and a $20 stock price are a function of how close their targets are to the "rock bottom levels" of $1.00 per share, a 10% ROE, and a $20 stock price rather than to the investor expectation minimum such companies will normally have a hard time earning 70 points but can nonetheless get scores of 50 or higher with a plan that incorporates a successful turnaround strategy and that delivers upward trending results (albeit from a low level of overall performance). beating the target (80 points max. if applied to all five targets for each year of the plan). Thus, if all 5 performance targets are set at the level expected by investors and if these targets are subsequently achieved, then a companys 3-year plan score will come out to be an 80. If a target is only partially met, a proportional number of points is awarded (thus achieving an EPS of $1.75 when the target is $3.50 results in an award of 8 points). The performance targets expected by investors are: o Annual EPS growth equal to 7% in Years 11-15 and 5% in Years 16-20 (the actual values for these targets for each year are shown on page 2 of the Footwear Industry Report) o Annual stock price appreciation equal to 7% in Years 11-15 and 5% in Years 16-20 (the actual values for these targets for each year are shown on page 3 of the Footwear Industry Report) o 15% ROE o Credit rating of B+ o Image rating of 70

16 points for setting any one target equal to the Investor Expectation Standard and then meeting or

18 points for setting a stretch target on any one performance measure that is one notch above the
Investor Expectation standard and then meeting or beating the stretch target (90 points max. if applied to all five performance measures) One notch stretch targets are: o EITHER 10% above the Investor Expectation EPS target for each of the 3 upcoming years OR annual increases of at least 10% per share per year above a companys most recent years EPS if the companys EPS was above the prior-year Investor Expectations levelthe OR clause is the ruling bonus point requirement any time a companys prior-year EPS exceeds the prior-year investorexpected target. o EITHER 10% above the Investor Expectation stock price target for each of the 3 upcoming years OR annual stock price gains of at least 10% per share per year above a companys most recent years stock price target if the companys prior-year stock price was above the prior-year Investor

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Expectations levelthe OR clause is the ruling bonus point requirement any time a companys prior-year stock price exceeds the prior-year investor-expected target. o 16.5% ROE (10% higher than the 15% norm) o Credit rating of Ao Image rating of 77 (10% higher than the norm of 70)

19 points for setting a stretch target on any one performance measure that is two notches above the
Investor Expectations level and then meeting or beating the stretch target (95 points max. per year if done for all five performance measures) Two notch stretch targets are defined as: o EITHER 20% above the Investor Expectation EPS target for each of the 3 upcoming years OR annual increases of at least 20% per share per year above a companys most recent years EPS if the companys EPS was above the prior-year Investor Expectations levelthe OR clause is the ruling bonus point requirement any time a companys prior-year EPS exceeds the prior-year investorexpected target. o EITHER 20% above the Investor Expectation stock price target for each of the 3 upcoming years OR annual stock price gains of at least 20% per share per year above a companys most recent years stock price target if the companys prior-year stock price was above the prior-year Investor Expectations levelthe OR clause is the ruling bonus point requirement any time a companys prior-year stock price exceeds the prior-year investor-expected target. o 18% ROE (20% higher than the norm of 15%) o Credit rating of A o Image rating of 84 (20% higher than the norm of 70)

20 points for setting a stretch target on any one performance measure that is three notches above the
Investor Expectation level and then meeting or beating the stretch target (100 points max. per year if done for all five performance measures) Three notch stretch targets are defined as: o EITHER 30% above the Investor Expectation EPS target for each of the 3 upcoming years OR annual increases of at least 30% per share per year above a companys most recent years EPS if the companys EPS was above the prior-year Investor Expectations levelthe OR clause is the ruling bonus point requirement any time a companys prior-year EPS exceeds the prior-year investorexpected target. o EITHER 30% above the Investor Expectation stock price target for each of the 3 upcoming years OR annual stock price gains of at least 30% per share per year above a companys most recent years stock price target if the companys prior-year stock price was above the prior-year Investor Expectations levelthe OR clause is the ruling bonus point requirement any time a companys prior-year stock price exceeds the prior-year investor-expected target. o o o 19.5% ROE (30% higher than the 15% norm) Credit rating of A+ Image rating of 91 or more (30% higher than the norm of 70)

Different stretch objectives may be set for each of the five performance measures. In other words, a company can have an A+ credit rating objective (a three-notch stretch), an image rating objective of 77 (a one-notch stretch), a 18% ROE objective (a two-notch stretch), an EPS objective equal to Investor Expectations, and a stock price objective that is below Investor Expectations. If a company meets or beats a performance target, then its performance score for that target equals the corresponding number of points for that target. Underachievement of any of any target results in a point reduction proportional to the underachievement, subject to a minimum consolation prize score of 10 points on the targets set for EPS, ROE, and stock price. For instance, if co-managers set a 30% stretch target of $10 per share for EPS (which carries a score of 20 points if achieved) and actual EPS turns out to be just $6 (60% of the targeted level), then they will incur an 8-point penalty and get only 12 points (60% of 20 points). If co-managers set a 30% stretch target of 45% for ROE and actual ROE turns out to be

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just 15% (33% of the targeted level), then they will be awarded the automatic minimum 10-point consolation score for ROE. To get a good (80 or better) performance score for any one year of the plan, the scoring approach requires that a company achieve performance levels at least commensurate with investor expectations that year (as shown on pages 2 and 3 of each years Footwear Industry Report). To receive scores above 80, a company must set stretch objectives that are higher than the investor minimum performance targets and then meet or beat these stretch targets. Clearly, the point system for judging the caliber of a companys strategic plan (1) rewards co-managers for setting stretch objectives and then succeeding in meeting or beating the stretch objectives and (2) punishes the strategic plan scores of companies when the targeted levels of performance are not met. Indeed, the scoring is based on three principles: A companys strategic plan is good if management met or beat the targeted levels of performance and if these targets contained some stretch. A companys 3-year strategic plan is not so good if it results in a performance far short of what was promisedthere can be no applause whatsoever for a strategic plan that over promises and under delivers. There is no glory to be gained by sandbagging and setting easily achieved performance targets setting and achieving high stretch objectives earns a higher strategic plan score than does a plan where company co-managers set lower target objectives and achieve them. A companys performance score for any one year of the plan is the sum of the points earned for each of the five performance targets. A companys overall performance score on the 3-year plan is the average of the performance scores earned for each of the 3 years of the plan period. The scores earned on the 3-year plan are reported to co-managers on the 3-Year Strategic Plan link that appears on the top of their Corporate Lobby screenas the results for each year of the plan become available, all they have to do to track their scores is just click on the link and the scores will be shown near the top of the page that appears.

Strategic Plan Scores Are Automatically Reported in Your Online Grade Books. The details of
each companys scores on the 3-year plan are recorded in your 3-Year Strategic Plan Grade Bookthis grade book appears in the Grading and Scoring category on your Administration Menu whenever you schedule a 3-year plan. The 3-year strategic plan grade book shows (1) the performance targets each company established for each year of the plan, (2) whether the targets were met and the points received for each target objective, (3) a total annual score for each year of the plan, and (4) an overall performance score across all three years of the plan that is the average of the three annual scores. You have the ability to include the scores on the 3-year strategic plan(s) in each individuals grade for the entire BSG exercise. All you have to do is to designate some percentage weight to 3-year plan in the BSG Simulation Grade Book; this grade book is programmed to calculate an overall simulation grade for each participant covering the quiz scores, the average score for strategic plan(s), and other assignments.

The Administration Menu


When you click on one of the Industry links in the Industry/Course Administration box on the Instructor Center page, you are immediately directed to a page with an Administration Menu, data relating to each company in the industry, an Industry Scoreboard, the latest exchange rates, and the latest interest rates. This page, most particularly the Administration Menu, provides you with a powerful, user-friendly set of tools for handling most every conceivable issue and conducting the simulation in a time-efficient manner.

The Administration Menu. There are seven menu categories:


1. BSG Participants and Teams (includes 7 menu selections) 2. Scheduling and Assignments (includes 5 menu selections) 3. Grade Books and Scoring (includes as many as 5 menu selections) 4. BSG Reports for Industry (includes 6 menu selections)

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5. BSG Settings/Controls (includes 7 menu selections) 6. Performance Assessments (includes 2 menu selections) 7. Remove this Industry (includes only 1 selection) Simply click on a menu category to view the selections and access which options you wish to use. You can hover over each individual menu item for a brief pop-up explanation. BSG Participants and Teams List of Registered Participants This item shows all class members who have registered for your BSG industry. The list is arranged by company/team. You may also edit any or all of the company names; simply click on the name you wish to change. You may want to print this list to quickly reference which class members are co-managing which companies. Access a Corporate Lobby To see what students/participants see, you can use this feature to log-in to the account of any student/participant and access the teams Corporate Lobby web page. If the participant whose account you choose to log in to is also currently logged in, he/she will be automatically logged-out when you use this feature. Activity Logs of Participants This item provides data regarding the frequency and length of each co-managers log-ins, how many times each co-manager saved decision entries to the GLO-BUS server each decision round, and how many times each co-manager viewed each set of reports each decision round. The activity logs are organized by company/team, so that you can readily compare the log-on activities of the co-managers of each company. You can peruse this data to get a rough idea of how much time class members are spending on the simulation. Class members with abnormally low levels of log-on activity are candidates for being low contributors to their companys performance and not carrying their share of the workload. However, it is very important to recognize that any one comanagers log-on activity may not reflect the true degree to which he/she is truly involved since it is possible that companys co-managers typically gather round a single PC in the computer lab or at one co-managers residence and therefore use just one co-managers account/PC to make most all of the decisions. So you should use the log-on data with caution in concluding that low levels of web site usage absolutely equate to a sub-par effort. But you will find that the activity logs, taken in conjunction with the peer evaluations, are indeed useful to have at your disposal in monitoring the effort levels and involvement of individual co-managers. Restrict Use of a Participant Account This option is used when for some reason you want to deny a particular class member or all co-managers of a particular company or the entire class access to (1) emails announcing the yearly results, (2) Corporate Lobby scoreboards, and (3) the Decisions and Reports screens. Some instructors like to use this option immediately after a decision round is processed (most often after the final decision) because they like to reveal the decision round outcomes and company standings in class and do not wish company co-managers to know what occurred prior to the class meeting). Move a Participant This option is used when you want to move a co-manager from one company team to another or from one industry to another. Delete a Participant This option is used when a class member drops the course and you need to remove his/her account from the simulation. If a student/participant has registered for the wrong company, use the Move a Participant feature (above) to move the account to the proper company rather than deleting it. Add a New Company This option is used when students appear in the course late or add the course and you need to create a company for them to manage. The Add a Company option is also useful if you find it necessary to split an existing company into two separate and independent companies. The maximum number of companies in an industry is 12, so you may use this feature only if there are less than 12 existing companies in the industry. Delete an Existing Company (available only after any practice decision rounds are complete and the Data Reset has occurred) This option is used when (a) all or most of the co-managers for a company have dropped the course, (b) when all co-managers of a company have been moved to other companies, or (c) you have opted not to assign co-managers to one or more companies that were created during Course Setup. The minimum number of companies in an industry is 4, so this feature is available only if there are more than 4 companies in the industry. Also, the accounts all class members registered to manage a company must be moved or deleted before you can permanently remove that company from the industry using this feature.

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IMPORTANT: It is best that you do not to announce to your class that you are deleting one or more companies. Simply wait until as close to the upcoming decision round deadline as possible and then delete the company or companies. When the next decision round deadline arrives, the system will automatically make all necessary adjustments, and the sales forecast screens for the remaining companies will then accurately reflect the new industry configuration. Scheduling and Assignments BSG Decision Rounds Schedule Click this item any time you want to change or schedule a deadline date/time for a decision round (year). BSG Assignments Schedule Click this item any time you want to change the availability or deadline date/time for BSG Quiz 1, BSG Quiz 2, a 3-year plan assignment, the company presentation, or the peer evaluation exercise. Note: To inform class members of any change in the schedule of decision deadlines and assignments, you can (1) check the box that automatically sends co-managers an e-mail indicating a schedule changethis box is on the page where you enter new decision round or assignment deadlines or (2) personally send all class members an e-mail alerting them to the changes you have made (you can use the built-in messaging system for this) or (3) announce the change in class or (4) do all of these. Allow Re-Take of BSG Quiz 1 This menu option enables you to grant any class member re-access to Quiz 1 for the purpose of changing answers to questions that have already been answered or to retake the entire quiz. Allow Re-Take of BSG Quiz 2 This menu option enables you to grant any class member re-access to Quiz 2 for the purpose of changing answers to questions that have already been answered or to retake the entire quiz. Process a Decision Round Now With this feature you can have the system generate the results for the upcoming year immediately rather than waiting for the deadline on your decision schedule, effectively changing the upcoming decision deadline to now rather than the originally scheduled date/time. It is a particularly useful option if you want to process the results immediately at the beginning or end of your class or immediately following a session in the computer lab. If you use this feature, the results will typically be available to students within a minute or less. Roll Back to Prior Decision Round This feature gives you the ability to have the system undo the prior years decision round results. Normally, Roll Back is used only in two circumstances. One is when one or more companies made huge and debilitating mistakes that you feel must be rectified (and which are not fixed by issuing a refund). The second is when one or more companies encountered circumstances that prevented them from entering decisions in time to meet a deadline. We included this option just in case you feel it is the best way out of a bad situation. When you click on the Roll Back option some instructions about how to proceed will appear. Please read the instructions carefully and call the instructor support line if you are unsure about how to proceed. Grade Books and Scoring Company Performance Grade Book The Company Performance Grade Book contains scores of company performances for each decision round. There are annual and game-to-date scores for both the Investor Expectations Standard and the Best-in-Industry Standard. The two scoring standards are weighted 50-50 in calculating an overall score, but you can change the default weights to whatever percentages suit you. The switch for the Bonus Points feature (page 3b of the Footwear Industry Report) also appears near the top of this page. If for some reason you wish to remove the Bonus Points feature from play, just uncheck the box. See page 26 for an explanation of the Bonus Point feature. Simulation Scoring Weights This menu selection gives you the ability to change the 20% default scoring weights on each of the 5 performance measures at any time. Such a change will result in all the scores on the next issue of the Footwear Industry Report being recalculated, with the recalculations applying to all completed decision rounds. If you want one or more of the 5 variables to carry a higher weight than 20%, then our advice is to up them to 25%-30% and cut others back to 10%-15%. If you opt to alter the weights, please take the following into account:

We caution against reducing the EPS weight below 20% because in the real world EPS is clearly the dominant factor in gauging a companys performance.

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We also caution against reducing the credit rating weight below 20% because it sends the wrong signal to company managers about the imperatives of maintaining the companys financial condition and financial health. If you are tempted to cut back on the image rating weight, be aware that the image rating is a function of three factors: (1) a companys market shares for branded and private-label footwear in each of the four geographic regions, (2) the styling/quality (S/Q) ratings of a companys branded footwear in the four regions, and (3) company actions to display corporate citizenship and conduct operations in a socially responsible manner over the past 4-5 years. The image rating strongly reflects the companys market standing and market position and is a good measure of the companys strategic performance in the marketplace and its commitment to operating in a socially responsible manner. All the other performance measures are financial measures. Giving the image rating at least a 15-20% weight adds an element of balance by assigning some importance to nonfinancial measures of performance. Scoring Variables EPS ROE Stock Price Credit Rating Image Rating Option 1 25% 20% 20% 20% 15% Option 2 30% 15% 15% 20% 20% Option 3 35% 10% 20% 20% 15% Option 4 30% 10% 15% 20% 25%

Some of the best possibilities for altering the 20% default weights are shown in the table below:

3-Year Strategic Plan Grade Book (appears in the menu only if you elect to assign 1 or 2 strategic plans) This contains each companys scores on the 3-year strategic plan assignments. BSG Assignments Grade Book The BSG Assignments Grade Book contains each participants scores on quizzes 1 and 2 (if assigned), a space to manually enter scores for end-of-game company presentations (if assigned), their average scores on the 3-year strategic plans (if assigned), their companys overall performance score for all decision rounds completed, and peer evaluation scores. There are boxes for you to enter the weights for all of the various assignments; a grand total grade is automatically calculated for you based on the weights you have entered. BSG Reports for Industry X Footwear Industry Report If you want to stay on top of whats happening in an industry, then after each decision round is processed you should view/print the Footwear Industry Report (FIR). The FIR, which is provided to all co-managers, consists of a 3-page company scoreboard of performance, a page of assorted industry statistics, a page of comparative financial statistics, a page of benchmarking data, and a page relating to celebrity endorsements and graphs of industry trends for prices and footwear styling/quality (the S/Q ratings). Competitive Intelligence Reports We also recommend printing these reports after each decision round. The Competitive Intelligence Reports, also provided to all co-managers, show each companys competitive effort in each geographic region (prices, advertising, S/Q ratings, number of footwear models offered, warranties, promotional efforts, and so on). Company Operating Reports This option gives you access to any companys financial statements and operating reports. Not only can you review them at any time for any reason, but you will also find them useful in counseling the co-managers of troubled companies should they come to your office to explore strategy optionseveryone can gather around your PC and you can have an onthe-spot session to consider alternative decision entries. Administrators Report This is a special report for your eyes only. It provides a quick overview of key numbers for every company in the industryitemized costs and operating statistics by company and cross-company comparisons of pairs of footwear sold and market shares. The data in the Administrators Report go far in revealing why some companies are doing better than others. 3-Year Strategic Plan This menu selection enables you to review any companys strategic plan. Decision Summary Report This menu selection provides you with a time-series summary of all the decision entries for all decision rounds (including the upcoming year), company by company. It is an incredibly useful tool for reviewing what a particular company has done over time and tracking its strategic moves.

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BSG Settings/Controls Costs/Rate Parameters Use this option to deliberately give companies unexpectedly higher/lower cost conditions to deal with. There several cost parameters that you can change as the decision rounds unfold. It is a good idea to periodically change some costs and rates because company co-managers need experience in coping with uncertainty and a changing cost structure. But it is wise for the sizes and frequencies of any changes you institute to be realistic rather than extreme. You can announce any changes to the companies using the Message Center. Changing one or two costs each decision round starting about the fourth or fifth decision round has merit, but this is strictly up to youyou should not feel any obligation to make changes, since the competitive dynamics of move and countermove among the companies always acts to keep market conditions in a state of flux. Celebrity Endorser Settings This option allows you to alter the names, Consumer Appeal Indexes by region, and other factors related to each celebrity endorser. Plant Capacity Purchases This selection enables you to monitor the used plant capacity available for sale in each of the four geographic regions, to view any purchases of used capacity that may have taken place since the processing of the prior decision round and, perhaps more importantly, to cancel/nullify a particular companys upcoming purchase of used capacity (for whatever reason). Refunds and/or Fines This menu option comes into play only on those occasions when (1) you want to refund monies to a company for mistakes that you want to help rectify or (2) you want to levy fines for such misbehavior as conspiring with other companies to fix prices (which sometimes does occur) or habitually not meeting decision deadlines. Exchange Rate Impacts This selection allows you to reduce the sometimes favorable and sometimes unfavorable impacts of shifting exchange rates of company revenues and ultimately on company profitability. We do not recommend, as a rule, that you deviate from the 20% maximum impact we use as the default setting because in the real world exchange rate impacts over a full-year period are quite often in the neighborhood of 20%. In a globalized economy, we believe class members need to understand and experience the risks of shifting exchange rates and learn to cope with them. Market Segment Growth Rates This selection enables you to change the rate of growth in footwear demand for any market segment for the upcoming year. Sensitivity of Demand Factors This selection allows you to alter the importance of any of the competitive factors that affect branded footwear sales and market share. This option should rarely be used since we have made a very conscientious and careful effort to program an internal weighting system based on our experience of watching many, many simulation industries over many years. Yet, there may be occasions when one of your industries gets into a fiercely heated competitive battle such that you feel too much or too little attention is being given to one of more of the competitive factors. This option allows you to alter the competitive sensitivities of one or more factors within certain ranges. The multipliers for each factor are set at 1.00; you have the option to alter a multiplier to as low as 0.75 or to as high as 1.25. Should you start altering the multipliers, you should always have the total sum remain the samethus if you lower some multipliers by a total of 0.10, then others should be raised by a total of 0.10. Performance Assessments Performance Benchmarks Report This report provides data indicating how your particular industry (class) is doing versus industries/classes at all other business schools and colleges where The Business Strategy Game has been played in the last 12 months. Learning Assurance Report (LAR) Access this report only at the conclusion of the exercise and after the peer evaluations have been done (since peer evaluation responses are used in the LAR). The LAR provides you with convincing empirical data on 9 measures of student performance that are precisely defined at the bottom of the report. The LAR is useful in two very important respects. One, it provides you with a clear overview of how well your students rank relative to students at other schools worldwide who have gone through this competition-based simulation exercise over the past 12 months. Two, because the report provides highly credible evidence regarding the caliber of business proficiency and decision-making prowess of your students, it can be used to help assess whether your schools academic curriculum in business is providing students with the desired degree of business understanding and decision-making acumen. Professors, department chairs, and deans at many business schools worldwide are engaged in developing ongoing evidence of whether their academic programs meet the Assurance of Learning Standards now being applied by the Association to Advance

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Collegiate Schools of Business (AACSB); a prime goal of this Learning Assurance Report is to contribute significantly to this effort. Remove this Industry Delete this Industry This selection allows you to permanently remove all records for an industry. Once deleted, the data cannot be retrieved. We recommend that old industries be permanently deleted within a year of completion. The intent of all these menu selections is to (a) provide every possible function you might need, (b) give you a wide range of options for customizing your use of BSG, (c) require as few mouse clicks as possible, and (d) minimize the time it will take you to use BSG in your course. Should you spot ways to improve the Administrative Menu, please forward them to uswe are committed to continuous improvement and will consider any and all suggestions for making The Business Strategy Game work better for you.

Eight Tips for Successfully Using The Business Strategy Game


Based on our experiences in using the simulation, there are several things that contribute greatly to conducting the BSG simulation in an effective and successful fashion: 1. Schedule 2 practice rounds (barring time constraints) to deepen class member familiarity with the how the software works, the decision entry screens, and the information and outcomes provided after each decision round. Two practice rounds also give company co-managers a chance to try out different strategy/decision combinations and see what happens. 2. During the Course Setup Procedure, create an extra company for you to operate throughout the practice rounds (and maybe for several additional decision rounds)do this especially if you are a first-time user or if you want to learn more about what operating a company is all about. The company you manage can easily be deleted later. Running a company yourself is the quickest and most productive way to familiarize yourself with how things work, explore all the various decision entries, view the reports showing the results of each decision round, and experience what the simulation experience for students is all about. Operating a company will equip you to (1) see the value of the information that you and your students are furnished after each decision round, (2) provide the class with your perspectives about the competitive battle that is taking place and call attention to particularly interesting outcomes, and (3) be wise in assigning grades and otherwise conducting the simulation. The knowledge and understanding gained will also enable you to answer student questions about this or that aspect of the simulation (which sometimes occurs) and, if you wish, to provide advice and counsel to companies that may be floundering and need some guidance.

If you opt to run your own company, inform the class which company you are running, tell them it will be a temporary thing (and that your company will be deleted later), indicate that you will exercise care in making competition friendly decisions that are not aimed at stealing sales and market share from other companies, and make it clear that you have no intention of trying to outcompete the companies they are running or otherwise demonstrate your prowess. What class members need to understand is that your purpose in running a company during the practice rounds is to become as familiar as possible with what is involved in making decisions, managing company operations, and comprehending the information in the various reports available to all companies. Once the practice rounds are completed, there is an item on the Administration Menu for the industry that enables you to quickly and easily delete the company you are running from the competition. (Note: No company can be deleted until the practice rounds are completed.) Also, bear in mind that the built-in Collaboration and VoiceChat capabilities allow you to join an online meeting of the co-managers of any companyeither as an observer or as an advisor/consultant. If you have run a company yourself for several decision rounds, you will be better prepared to take on this role, answer student questions about this or that aspect of the simulation (which sometimes occurs) and, if you wish, to provide advice and counsel to companies that may be in need some guidance. 3. Stress to class members the importance and value of using the Video Tutorials and the detailed Help sections to find answers to any questions they have.

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The short 2-3 minute Video Tutorials are particularly helpful during the practice rounds when students first encounter the software menus and the information on the screens and are wondering what to do next. Whenever class members want more in-depth explanations and details than contained in a Video Tutorial (or the Players Guide), all they have to do is click on the Help button at the top of a decision screen or report page. The Help sections for decision screens provide information about each decision entry, full explanations of cause-effect relationships, and tips/suggestions about what to do and not do. The Help sections for any page of the Company Reports, the Footwear Industry Report, and the Competitive Intelligence Reports explain what the numbers mean, how they are calculated, and how to use the information to good advantage. We have gone to considerable lengths to make the Help pages incredibly valuable and useful to company co-managers in understanding how things work and in wisely and successfully managing their companies. If you insist that class members make full use of the video tutorials and consult the Help pages any time that questions or issues arise (and not lean on you for answers that they can discover for themselves), you will find (as have we and other BSG users) they will be able to figure things out nicely for themselves.

Here, it is well worth taking a few minutes of class time to explain to company co-managers that they can be never too well-informed about all the various aspects of their companys operations or about the cause-effect relationships built-into the simulation, but that it is exceptionally risky and dangerous to be very poorly informed and have little command of what is going on. Company managers never put their companys performance at risk by knowing too much about their companys operations and how things work, but they very definitely put their companys performance at risk when they know too little. In the real world, managers get fired and ruin their careers when they act like loose cannons and make seat-of-the pants decisions rather than making thoughtful, informed, analysis-based decisions. 4. Urge company co-managers to have a printout of the latest Competitive Intelligence Report in front of them and consult its content before entering any upcoming decisions relating to pricing, advertising, S/Q rating, number of models, delivery time to footwear retailers, and all the other decision entry variables that determine their companys competitiveness vis--vis rivals. Tell them that if they dont consider how their companys competitive effort compared to rivals and to the industry average effort in each geographic region in the prior year (as displayed on the pages of the Competitive Intelligence Report), then they will be flying blind into competitive battle with no clue as to whether their competitive strategy and marketing effort is likely to succeed or be an utter disaster. 5. Urge company co-managers to pay special attention to the benchmarking data provided on page 6 of the Footwear Industry Report that accompanies the results of each decision round. Studying the numbers on this page is critical if company co-managers are to stay abreast of how well their companys costs compare with those of other companies in the industry. 6. Warn company co-managers against trying strategies and making decisions that are imprudent, highly risky, or un-businesslike (things that also would get a manager fired in a real company). The whole Business Strategy Game experience is about having class members assume the role of a business professional who is trying to achieve the best possible company performance using managerially prudent and responsible business approaches and endeavoring to make wise decisions in operating the company and fashioning a successful strategy. The Business Strategy Game exercise is intended to test a co-managers knowledge and skills in running a profitable and successful companywhich means acting in the best interests of shareholders and not driving their company to the brink of bankruptcy. Overzealous students who put their companys performance at risk with extreme prices or marketing tactics or who wander off on a tangent and endeavor to game the system almost always shoot themselves in the foot by driving down company performance. Little of value comes from students approaching the BSG exercise like a daring adventurer out to win some variant of a videogame with whatever off-the-wall or unbusinesslike decisions they can enter on the screens. When class members know you will hold them accountable for bad or foolish decisions that cause their company to bleed red ink while other companies are prospering, they will be less likely to make wild decisions or pursue irrational or boundto-fail strategies.

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7. Stay abreast of the results of each decision round. It will take about 10-20 minutes for you to explore the results of each decision round. First click on the industry you have created for your class that appears on the upper right of your instructor Center screen. Then, on the Administrative Menu on the left side of the screen, click on the link that says BSG Reports for Industry __, where you will see five report options. Check out the first three menu selections (Footwear Industry Report, Competitor Intelligence Reports, and Administrators Report) and spend as much time as you wish exploring the information. All company co-managers get the first two reports, but the Administrators Reports Report is only for the instructor and contains a lot of interesting cross-company comparison informationthis information is not provided to class members because of its competitively sensitive and proprietary nature. Usually, you have no compelling need to examine the Company Operating Reports, except to satisfy your curiosity about their contentsthese are used mainly when issues regarding a particular company arise that you need to look into more deeply. The Decision History report is rarely of much interest until perhaps midway through the simulation, at which point you may wish to check out the decision histories of the best performing companies and compare them to the worst performing companies to see whats working well and what is not. The Decision History report is also useful for counseling poorly-performing companies on ways they can improve. Once you have become familiar with the contents of the Footwear Industry Report and the Competitive Intelligence Reports, youll be able to zero in quickly on whats of particular interest and economize on the time it takes to monitor the outcomes. 8. Use 10-15 minutes of class time to debrief the teams on the results of early decision rounds. In our class, it is standard to have a debriefing to go over the results of the first practice round. We provide each class member a copy of the Footwear Industry Report and the Competitive Intelligence Report and then walk them through these reports page-by-page so they will be up to speed on all the information at their fingertips following each decision round. In this initial debriefing, pay particular attention to the information in the Competitive Intelligence Report showing the actions of all the companies in the marketplace (their prices, advertising, styling/quality ratings, rebates, and so on) and their positioning on the industry strategic group map. If you wish, you can have debriefings for the second practice round, maybe the first couple of scored decision rounds, and on those occasions when something of significance occurs that you want to talk about. These give you an opportunity to:

Call attention to particularly interesting outcomes and results, especially those in the Competitive Intelligence Report and the benchmarking data on page 6 of the Footwear Industry Report. Comment on any outcomes or conditions that company co-managers should take think about. Convince class members of the merits of digesting and diagnosing the results of each decision round before rushing into making decision entries for the upcoming year. Connect events in the simulation to your lectures on the chapters or to similar situations in some of the assigned cases youve discussed.

From to time-to-time, youll discover revealing tidbits of information in the Administrators Report (cost details, operating statistics, and profit margins) that you can summarize and share orally with class membersbut take care not to single out or identify any company in these remarks and give away its secrets. You can just say theres one company that or one company had unit labor costs as low as $___ or one company spent $___ on TQM/Six Sigma programs at one of its plants or one company reported an industry-high profit margin of $___ on each branded pair sold in Latin America, while one company lost $___ on its branded pairs sold in that same region.

Four Other Suggestions of an Administrative Nature


1. Use the Class Presentation PowerPoint slides that we have created to describe The Business Strategy Game to your class and explain some of the mechanics. To access the slides, click on the Class Presentation link in the Instructor Support box on the left side of the Instructor Center screen. 2. Require class members to take Quiz 1 and Quiz 2; set the deadline for completing Quiz 1 to correspond with the deadline for the first practice decision and the deadline for completing Quiz 2 to match the deadline for the Year 13 or Year 14 decision round. 3. Require company managers to do peer evaluations of their co-managers, as well as an evaluation of their own performance. Class members can see the content of the 12-question peer evaluation form by clicking on the Peer Evaluations link in their Corporate Lobby but they are not given access to completing the form until the availability date/time that you set in your decision schedule. To

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counteract the tendency of less motivated and less industrious co-managers to contribute little and ride the coattails of more industrious co-managers, it is wise to emphasize to the class early on that the results of the peer evaluations will be taken seriously and that failure to be a contributing team member will negatively impact their grade. While theres a strong propensity for teams to strike a deal whereby everyone gives their peers a good evaluation, it is often the case that team members will be sufficiently disenchanted with a non-contributors performance that they will give that person a weak evaluationlow peer evaluation scores are thus a fairly reliable sign of a problem! 4. Be wary of counting each class members simulation grade less than 15-20% of their overall course grade. Having the simulation exercise (and especially the overall company performance score) count only a small percentage greatly weakens the effort students put into running their company and thus causes many of the potential learning benefits to go unrealized.

What to Do About Poorly Performing Companies. Do not be overly concerned if one or more
company teams do poorly on the first one or two decisions. You should advise such teams that might be distressed with their initial results that it is quite possible to turn things around and come out as a market leader over the next several decision rounds and certainly by the end of the simulation. Sometimes it takes a while for a companys strategy to begin to bear fruit or the chemistry on the team to jell; sometimes, the initial strategy is ill-conceived or is thwarted by the strategies of rival firms and thus has to be adjusted. In our experience, companies that are the leaders after the first one or two decisions often are unable to sustain this leadership. Just as who is ahead after one or two innings of a 9-inning baseball game may not end up winning, so is it that the early leaders in The Business Strategy Game are not necessarily destined to come out on top at the end. Naturally, of course, the co-managers of companies who fare poorly will be concerned and come to you for advice and counsel about how to improve. Tell concerned co-managers of low-performing companies that much of the information provided in the various reports is diagnostic (particularly the Competitive Intelligence Reports) and points directly to things that are in need of attention. In our experience, there are two primary reasons why companies perform poorly: 1. Company co-managers have a poor grasp of the contents of the Players Guide and/or have not spent time reading the Help pages (which provide substantial guidance in how to approach strategizing and decision-making). 2. Company co-managers are not paying nearly enough attention to studying and digesting the information in all the reports and diagnosing their companys situation. When they are directed to really probe the information in the Footwear Industry Report (especially the cost benchmarks on p. 6) and the Competitive Intelligence Reports and use this information as a basis for making their decision entries, then their company usually performs better. Co-managers are provided a wealth of information for identifying what went wrong, where their costs are out-of-line with rivals, and what sort of changes in prices, advertising, and so on are needed to boost sales and market share. Company managers who conscientiously look at the numbers will have little trouble spotting avenues for improving their companys performanceeach page of the Competitive Intelligence Reports provides a list of competitive strengths and competitive weaknesses in each of the four geographic regions. Determine if company co-managers have grasped the significance of the information in the Competitive Intelligence Reports and have really dug into the numbersif not, this is the root of their problem. Urge that they pay very special attention to the numbers in these reports, read the Help pages for these reports, and take actions to remedy their companys competitive weaknesses. Sometimes, bad results turn out to be a positive catalyst for co-managers, causing them to really buckle down, dig into the numbers, and get serious about the effort they are putting into the simulation. Students can learn every bit as much from their mistakes and from efforts to turn their company around as from enjoying success decision round after decision round.

Dealing with Disagreements among Co-Managers and Non-Contributors. On occasions,


company co-managers get into such serious disagreements or have disruptive personality conflicts that it makes sense to move one or more co-managers to a different company. While moving a person from one company to another should be done sparingly, it does give you a sometimes workable out for dealing with unusually severe problems among company co-managers. Moving a student to a different team is quickly accomplished. All you have to do is select the Move a Participant option on the Administration Menu. But you should probably first consult the co-managers of the company to which you want to move the person and secure their approval to take on a new member.

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Another very good solution is to use the Add a Company in the Administration menu. The Add a Company feature gives you the capability to assign disgruntled or low performers as co-managers to run a newly created company as they see fit. This can sometimes be the best solution for all concerned. As with any team assignment, situations will arise where a co-manager does not carry his or her share of the workload, causing other co-managers to complain or otherwise voice displeasure. There are several ways to handle this situation. One is always to urge the hard-working co-managers to have a heart-to-heart talk with the person who is slacking off; you can also offer to talk with the low-contributing class member if the other co-managers think that would be helpful. A second way is to remind the low-contributing co-manager (or the class as a whole) that there will be peer evaluations at the end of the course and that poor peer evaluations are likely to have an adverse and perhaps severe effect on the grade assigned. If an alleged low-performer's contribution still does not improve, you may have to read them the riot act, threaten to drop them from the simulation with a failing grade, or use the Add a Company routine and have the low-performer run a company on their own.

Stirring the Pot by Changing Certain Costs or Rates. While you should not feel any obligation to
change certain costs as the decision rounds unfold (since the shifting winds of head-to-head competition are always making market conditions somewhat dynamic), there is merit in subjecting companies to higher/lower tariffs or unexpected changes in selected cost components at least once or twice during the simulation. It is typical in the real world for company managers to have to deal with changing costs for one or more factors. You have the option of shaking the industry up a bit by raising/lowering tariffs in selected geographic regions, raising/lowering prices for new plant capacity, and imposing higher/lower costs for shipping, inventory storage, and other factors. To see the assortment of things you can change, use the Settings and Controls item in the Administration Menu and choose Change Costs/Rates. Should you decide to alter costs and rates, we urge that any changes be realistic as concerns both the size of the change and the frequencies of any changes. Here are some possible changes, all presented in the form of a news bulletin that you can announce to the companies in class or by e-mail (using the internal email system accessed from your Message Center):

The rising costs of crude oil worldwide over the past 12 months have forced shippers to raise their prices

for transporting footwear from plants to distribution centers. Effective immediately, the prices for shipping will be $1.50 per pair for shipping within a region (up from $1 per pair) and $3 per pair for shipping across regions (up from $2 per pair). Further price increases are possible.

Recent declines in the prices of gasoline and other fuels have allowed shippers to trim their prices for

transporting footwear from plants to distribution centers. Effective immediately, the prices for shipping will be $0.80 per pair for shipping within a region (down from $1 per pair) and $1.75 per pair for shipping across regions (down from $2 per pair). have agreed to reduce their tariff on imported footwear from $8 to $7 per pair, effective immediately.

Governments in the Asia-Pacific, in the interest of signaling their support for freer trade between nations, Governments in the Europe-Africa have agreed to become more supportive of free trade. Effective
immediately, the tariff to import footwear into Europe-Africa has been reduced from $4 to $3 per pair.

Governments in Europe-Africa, desirous of recruiting new footwear plants to boost employment

opportunities for their citizens, are offering to subsidize 20% of new plant construction costs for plants built in Europe-Africa. This offer, which is good only for new plants ordered in Years 12, 13, and 14, effectively reduces the cost to build new plants in Europe-Africa by 20%. (Note: This change is implemented by reducing the cost of new plants in Europe Africa by 20% for Years 12, 13, 14 and then raising the prices back to its former level in Year 15.) announced some new policies. Effective for Year 16 only, there will be a 20% subsidy both for new plants and for plant expansions. In addition, Europe-Africa governments have opted to raise the tariff on imported footwear from $4 to $5 per pair to provide further incentive for new job creation in footwear within their borders. their borders, have retaliated against Europe-Africa and are offering a 15% subsidy to help induce footwear companies built plants in Latin America. The 15% subsidy is for 1 year onlyYear 14. Thus plants ordered for new construction in Latin America in Year 14 will cost just 85% of the regular price. $15 per pair. The price for standard materials remains unchanged.

Political leaders in Europe-Africa, annoyed that their 20% subsidy offer did not attract more takers, have

Latin American governments, concerned about losing out on new footwear plants being located within

Effective immediately, suppliers have raised the base price for superior materials from $12 per pair to 39

The Business Strategy Game

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Materials suppliers today announced that the base price for superior materials is being cut from $12 per
pair to $10.75 per pair and that the base price for standard materials is being raised from $6 per pair to $8 per pair. Both changes are effective immediately. various distribution centers will rise from $0.50 per pair to $0.60 per pair for all pairs in required inventory and from $1.00 to $1.25 per pair for all pairs that represent surplus inventory. worker per year. The new minimum wage requirement takes effect immediately.

Effective immediately, storage costs for branded footwear carried over from one year to the next in the

Governments in the Asia-Pacific today passed legislation requiring a minimum base wage of $3,500 per
The above bulletins are samples, and it is a simple matter for you to review the costs/rates that can be changed and craft news bulletins containing whatever increase/decreases in whatever costs or tariffs that you want to institute. Remember that you must implement all of the announced changes by inputting the new values in the last column of the Cost/Rates screen and that these must be inputted at times matching the content of the bulletin. Unless you deliberately want the cost change to come as a surprise, you should craft a news bulletin announcing the changes and send it out to the class. We suggest sending the bulletin out via the internal email system usually within an hour after the results for a given year have been processed. This will allow all company co-managers plenty of time to take the change into account in their decision-making for the upcoming year. If you wait much later, the eager-beaver managers who jump right in and make their decisions early will be caught unaware and/or have to go back and redo parts of their decision when they learn of the news. You might also want to announce the change in class, just so all co-managers will know about the new conditions you have instituted.

If You Have Any Questions


Please feel free to contact BSG technical support for assistance on any issue or to answer any questions you may have. All you have to do is click on the Technical Support link in the Instructor Support box on the left side of the Instructor Center page. It provides a telephone number and an e-mail message system. We reply to all e-mails as quickly as we possibly canusually within a few hours.

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